Table of content:
Background information of the chosen company:
Discuss the supply chain structure of Saint Gobain Glass:
Discuss the sourcing materials and services:
Distribution system of the major customer:
Discuss demand management and inventory system involved:
Saint Gobain is one of the largest multinational companies in the world who is dealing with various structural and construction companies. Therefore, there is an increase in the supplies and thus increase in demand for their products. Therefore, the company needs to be operating within a proper supply chain management system. Supply chain management is the term used to describe the flow of goods and services and processing of raw materials ad reaching the finished goods to the consumers (Chopra, Meindl & Kalra, 2013). The primary purpose of the study is to understand supply chain structure of Saint Gobain, the materials which they are sourcing and the overall manufacturing process of glass and finally, the distribution system for their major customers and the management of demand will be discussed for the following study.
Saint Gobain is a French multinational company which was founded in the year 1665 having their headquarter in Paris. Initially, when the company was formed it was a glass or mirror manufacturing company (Saint-Gobain, 2020). At present Saint, Gobain is organised into three sectors and they are building sector which is acquiring 49% of the business, construction sector products which are having 27% of the business and innovative material which is acquiring 23% of the business.
Types of Products:
Previously the company started as a mirror manufacturing company, however, at present they are producing varieties of construction, high performance, and other construction materials. Moreover, the company is also working on energy efficiency and protection of the environment (Saint-Gobain, 2020).
Since the company is operating in both glass and construction business, therefore, they have a diversity of clients. However, some of the major customers are construction companies and hotels, major projects including residential and commercial. Other than that, they are having normal people or customers in general who is getting their everyday products like mirrors (Saint-Gobain, 2020).
Number of Employees:
According to the recent evaluation of the company globally, it was found that the number of staffs working globally is more than 200,000 which are spread across headquarters, distribution centres and retail (Saint-Gobain, 2020).
The board of directors of Saint Gobain are comprising of 14 members out of which 45% of the members are females and 73% of the members are males. At present, the CEO of the company is Pierre Andre De Calendar (Board of directors and Committees, 2020). The directors are elected for the company based on four years as per article 9 of their bylaws. The decisions of the company are made based on the three board committees and they are:
Founded in the year 1665, Saint Gobain is one of the largest glass manufacturer and distributor in the entire world. The supply chain of the glass company like Saint Gobain needs to be such that it is not only fast and more cost-effective but also they are being designed such that they can leverage the use of technology and also provide complete transparency and visibility (Courtial, 2020). Moreover, knowledge is one of the most powerful methods which is used for the sharing of the environment and effective collaboration. It makes every process seamless and anchored to provide efficient customer experience. At present, the company is having two central logistics platform which is operating from the USA and Europe. Other than that, there are various other local distribution centres spread worldwide. Saint Gobain is presently having more than 45000 stock products which are present in two central platforms and more than 36 distribution centres across the globe. Other than that, the company is having almost 15000 order lines which handle the shipment of the order every single day (Saint-Gobain, 2020). Furthermore, there are more than 4000 logistic specialists which are present for the customers. Because of the number of distribution system spread across the globe which is basically in the form of pooling they can have numerous stocks of products in their distribution centres and also make the overall process much more seamless and have products available for the consumers.
Glass is having a certain property which makes it fragile and stiff. However, since they are having a disordered structure, therefore, they are having the liquid qualification. Moreover, glass is known to have no thermal and electrical conductivity. In addition to that glasses are known as they do not react with any of the chemical substances. The raw materials which Saint Gobain sources for the manufacturing of glass are sand, soda, limestone, clarifying agents, colouring and glistening glass (Saint-Gobain, 2020). According to Saint Gobain glass, sand is three fourth of the overall composition of the glass. One of the methods which are used for the manufacturing and production of glass is float line technique. With the following method, they can produce glass 24*7. It is the process where a river of glass exits the furnace and after that, they are being cooled when they are progressing in the path which is of around 300 meters and later they are cut into large sheets which are in case of saint Gobain generally 3.2*2.2 meters (Glass Manufacturing Process | Saint-Gobain Building Glass, 2020).
Coming to the manufacturing process of the glass opted by saint Gobain there are four processes which are involved:
Every glass company have their own set of composition which they follow to develop their kind of glass. In the case of saint Gobain, they have the requirement of EN 572-1:2012 (Glass Manufacturing Process | Saint-Gobain Building Glass, 2020). Therefore, all the batch of raw materials is being controlled and mixed in proportion so that they can generate glass which is meeting the requirement of Saint Gobain and also it conforms to the regulations and standards of Saint Gobain. Most of the raw materials which are being used for producing glass are sourced from India (Cintora et al. 2015). Therefore, all the materials which are used for the manufacturing of glass are sourced responsibly. Moreover, saint Gobain utilises 20% of the recycled glasses. There are two benefits of using them as first they make the environment clean and secondly it helps in lowering the melting point of the overall batch and thus makes the overall process much more efficient.
After the entire process takes place they are being cut into various sizes and laminated they are coated with a special coating where they are created based on the needs and demands of the consumers. They are passed through a treatment process which provides them with a thermal coating and insulation and provides better solar control and easy cleaning properties.
With the change in the market need of the consumers and the increase in demand of the market have also increased to a significant level. Therefore, companies are choosing different ways to reach their customers and thus select different methods or distribution channels. Distribution is the term used to explain the process of how the goods and services are reached to the end consumers. Therefore, to reach the end consumers there are two methods which are used by the companies for the distribution system that is a direct method of distribution and indirect method of distribution. When it comes to the direct method of distribution the business is directly linked with the consumers and they are supplying the consumers directly (Kersting, 2012). While on the other hand, in case of indirect distribution system the company and the consumers are linked with a middleman who handles the distribution of their products and services.
In the case of Saint Gobain, they are serving different types of customers that is companies and residential people. Saint Gobain prefers pooling their distribution centres which further helps in the management of their inventory and also increases the availability of their products. According to Saint Gobain understanding, the customers’ needs and demands are the DNA of their distribution brand. Starting with the residential people or general customers they are serving them indirectly. That is, they are supplying their products to the area distribution centre and from there it is distributed to customers. Using the distribution channel helps them in better managing their pricing strategies and keeping up with the growth and profits. Majority of the companies and clients who are working with the company are construction companies (Saint-Gobain, 2020). Therefore, with the increase in market trends and rapid change in the demands of the customers the company is changing its distribution system where they are focusing more on a B2B distribution system.
This will again help them in reaching the customer demands and also take into consideration the profit margins. Using direct business to business distribution system will also help in addressing some of the issues related to price calculations, IT tools, governance and organisation. Therefore, for handling different consumer needs they are operating on a different distribution system. Coming to the consumer aspect of the distribution system when they are operating through a middleman there are different negative aspects of the following. First, the pricing strategy is not correct. Using the following system, the middleman will also include their profits, thereby making the product costlier for the consumers (Distribution and Services Solutions, 2020). Therefore, they are forced to select other brands over saint Gobain which will be available at a cheaper and affordable price.
This will greatly hamper their market performance over the long run. However, in terms of businesses some of the companies which are major customers of Saint Gobain like construction companies. They will be operating directly with the business rather than a middleman. Therefore, this will help in better pricing strategy, better performance and market growth. Recently, since the year 2015, the company is operating in collaboration with BearingPoint which is working in the name of Saint Gobain Building Distribution. With the help of this collaboration, they can launch successful projects with better pricing strategies and which are impacting positively both the business they are distributing and also for saint Gobain themselves. Presently using the following distribution strategy, they can operate in more than 2000 locations around the world with over 23000 employees. Moreover, according to the reports of 2019, they have been generating an overall revenue of $7 billion. The primary role of the collaboration and the distribution branch is to distribute construction materials to business clients (Saint-Gobain Streamlines Supply Chain Transactions, 2020).
Based on the analysis of Saint Gobain's distribution system they are opting for distributing their products and services to their customers, the following are the improvements which could be suggested to make the system more efficient. With the advent of an increase in technology and an increase in the use of online marketing and e-commerce. The company can select the option for distributing their products to their customers using online systems. Today majority of the customers are relying on online marketing and since the company is relying on the changing trends and customer needs, therefore, they need to opt for the online retail marketing where they can contact directly with the customers. One of the biggest benefits which Saint Gobain will be receiving from the strategy is that, it will help them have a proper price strategy which is both affordable for the customers and profitable for the company as well since, the cost of a middleman is eliminated.
Demand management is the term or planning methodology which is used by the companies so that they can forecast, plan and also manage the demands of the products and services of the company. Saint Gobain is one of the largest manufacturers of building products, high-performance materials and especially glass. They are operating in more than 2000 locations across the globe. The company is operating on complex systems of a network which is used for the delivery of their products and services. When the company is operating in numerous locations, there is an increase in demand for the products and services both for the customers and also for the suppliers. Therefore, the company operates with the integration of enterprise resource planning which will helps in automating the overall business process. Using enterprise resource planning they will be able to enhance their productivity, improve the supply chain management and provide a competitive edge of the industry (Our Brands, 2020).
Saint Gobain is utilising the Integration as a service in the Sterling solutions which is used as a communication with the customers and the suppliers so that they can automate the exchange of the documents of the business such as purchase order and invoice. This helps in improving the overall cycle of the payment, improve on-time delivery of the products to the consumers and also improve the relationships with the suppliers and improve their performance.
At present Saint, Gobain is operating on Sterling Business Integration Suite which is used for providing a connection with more than 80 public and private networks. One of the primary benefits of the following system is that it helps in reducing the use of paper-based transactions and also provide more transparency on both ends. This is beneficial in terms of Saint Gobain’s internal and external business. Another benefit of the system is that it provides a view of the complete overview of their inventory which in turn helps in managing the demands and improve their inventory system. Furthermore, using the system is helping them to manage the management process at a much lesser cost and better utilisation of the resources than the business which is done in house. In addition to that, they TIM or Total inventory management by RSG is used by Saint Gobain (Total Inventory Management (TIM), 2020). It is a new cloud-based inventory management system which we used for the optimization of the material management. This not only helps in streamlining the entire process but also reduce the cost, improve their productivity and thus in return improve their profit.
At present, the company with which the company is working in collaboration for inventory management is Mecalux (Saint-Gobain & Mecalux: a collaboration synonymous with success, 2020). Mecalux is working based on the periodic inventory system method, where the inventory is being managed and tracked periodically using the barcode system and tagging the items in the inventory. Saint Gobain is in the business since the year 1665 and at present, they are operating in more than 90 countries with thousands of outlets and operating solutions. Therefore, with collaboration with the company Mecalux they can improve their supply chain and inventory in countries such as France, Spain and Poland (Mecaluxcom, 2020). One of the benefits of the inventory system of Saint Gobain is that they are optimised, and they are using every single square meter for the installation of the system. Moreover, there is diversification of spaces because of which they can store both small and huge products of varied weights and heights. The maintenance of the warehouse is designed such that they are cost-saving and the entails time. One of the benefits of using automation system of Mecalux is that they can process thousands of orders at a time in a day which reduces the shipping time and reduces the delivery times in some of the urban areas to almost 1 hour. Thus, it makes the overall process seamless, less time consuming and more environmentally friendly.
One improvement which could be made in the inventory system and demand management of Saint Gobain is to opt for a perpetual inventory system. Using the perpetual inventory system, it is quite sophisticated, and they are delivering real-time data. It is effective because as soon as the inventories are entered into the facility, sold or being moved out they are updated immediately by the system (Lury & Wakeford, 2012). It is effective because of the use of RFID tags. The use of RFID tracks the real-time of the inventory and provides real-time information with the help of electromagnetic energy for transmitting the data. One of the primary benefits of the system is that it will reduce the labour cost of scanning and updating the system thus making the process even more seamless and more cost-effective than the system which they are opting for at present.
The primary purpose of the study was to understand the supply chain management of Saint Gobain which is one of the biggest manufacturing and construction company in the world existing in the industry since 1665. Therefore, from the study, it can be concluded that they are sourcing most of the raw materials from India and there are four processes which are involved during the production of glass. The company is opting for pooling of the distribution system which makes the process more seamless and cost-effective for the company. Mecalux is the warehousing company with which they collaborated and are working to provide better inventory management. This reduced the inhouse cost of inventory making it more feasible and efficient. Based on the study there are few areas where they can improve their inventory management and demand management further is by using perpetual inventory which is automatic and further reduces the cost of labour.
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