SUPPLY CHAIN MANAGEMENT

A PRESENTATION

BY

SHAILESH TOPNO

INTRODUCTION

SUPPLY CHAIN MANAGEMENTSUPPLY CHAIN MANAGEMENT (SCM) is

integrating management practices and information technology to optimize information and production flow among the processes and business partners within a supply chain. SCM is a management concept that integrates the management of supply chain process.

WHAT IS SUPPLY CHAIN ?

Consists of all parties involved, directly or indirectly, in fulfilling a customer request, include not only manufacturers & suppliers, but also transporters, warehouses, retailers & even customers.

Supplier Manufacturer Distributor Retailer Customer

Basic Supply Chain Process

Manufacture & Raw Materials

Export &ImportActivities

PrimaryMovement

DistributionCentres

SecondaryMovement

B2B & B2CDistribution

After-SalesServices

Reverse Logistics

After Sales Logistics

Suppliers Production Distribution Sales Channel Value-Added Services End UserDistribution

Distribution Logistics

Manufacturing Logistics

Inbound Logistics

Supply Logistics

In a supply chain, virtually all of the members serve as both customers as well as suppliers.

In the Li & Fung example, the Korean yarn producer and the Japanese zipper producer are probably only suppliers and the customer’s customers (folks like you and me) are probably only customers.

Every other organization in the supply chain is both

a customer and a supplier. See the figure on slide seven.

SUPPLY CHAIN

Supplier

Supplier

Storage} Service Customer

Supplier

Supplier

Supplier

Storage} Mfg. Dist. Retailer CustomerStorage

Yarn

Zippers

Factory1

Factory2

Factory3

Factory4

Factory5

TheCustomer(Retailer)

YarnDying &Weaving

WHY IS SCM SO IMPORTANT?TO Gain efficiencies from procurement,

distribution and logisticTo reduce transportation costs of inventoriesTo meet the challenge of globalization and longer

supply chainsTo meet the new challenges from e-commerceTo manage the complexities of supply chainsTo manage the inventories needed across the

supply chain

IMPORTANT ACTIVITIES INCLUDE DETERMINING Transportation vendors Credit and cash transfers Suppliers Distributors Accounts payable and receivable Warehousing and inventory Order fulfillment Sharing customer, forecasting, and

production information

WHAT ARE THE MERITS AND DEMERITS OF SCM ?MERITS : With the increased visibility into the supply chain

and adaptive supply chain network, you can be more responsive. You can sense and respond quickly to changes and quickly capitalize on new opportunities.

By offering a common information framework that supports communication and collaboration, SCM enables you to better adapt to and meet customer demands.

You can track and monitor compliance in areas as environment, health and safety.

With SCM, you can low operational expenses with timelier planning for procurement, manufacturing and transportation. Better order, product and execution tracking can lead to improvements in performance and quality - and lower costs. You can also improve margins through better coordination with business partners.

Tight connection with trading partners keep your supply chain aligned with current business strategies and priorities, improving your organization's overall performance and achievement of goals.

DEMERITS :SCM is hard to implement in immature/informal

organizations.SCM can fail if both parties are not willing to share

their insights ,information throughout. If in an entire SCM chain even one single node is

hiding information ,this will effect the profits and gains of the entire network which may finally collapse. So transparency is highly required in SCM.

Costs.Requires trust. Imbalance of power.Strategic challenges.

SUPPLY CHAIN ELEMENTS

Supply Chain Design Resource Acquisition Long Term Planning (1 Year ++)

Strategic

Production/ Distribution Planning Resource Allocation Medium Term Planning(Quarterly, Monthly)

Tactical

Shipment Scheduling Resource Scheduling Short Term Planning (Weekly,Daily)

Operational

FUNCTIONS OF SCM

SCM

Supplier management

Inventory management

Distribution management

Channel management

Payment management

Financial management

OBJECTIVES & GOALS OF SCM

to cut costs Increase profits Improve performance in relationships with customers

and suppliersDevelop value added services that give a company a

competitive edgeObjective is to be able to have the right products in

the right quantities(at the right place) at the right moment at minimal cost

Reduced inventory , reduced lead times , reduced warehouse cost , helps in forecast accuracy

DISTRIBUTION SYSTEMS

Trucking• Moves the vast majority of

manufactured goods• Chief advantage is flexibility

Railroads• Capable of carrying large loads• Little flexibility though containers

and piggybacking have helped with this

Airfreight• Fast and flexible for light loads• May be expensive

Pipelines• Used for transporting oil, gas, and

other chemical products

Waterways• Typically used for bulky, low-value

cargo• Used when shipping cost is more

important than speed

DISTRIBUTION SYSTEMS

SUPPLY CHAIN RISK

More reliance on supply chains means more risk

Fewer suppliers increase dependence Compounded by globalization and logistical

complexity Vendor reliability and quality risks Political and currency risks

IMPORTANT POINTS TO KEEP IN MIND

Segment customers based on service needs.Modify the supply chain to meet these service

requirements profitably.Customize the logistics network.Delay product differentiation till the last possible

moment.

Segmentation of customers based on service needs.

Customization of logistics network. Listen to signals of market demand and plan

accordingly. Differentiate product close to the customer. Develop a supply chain wide technology

strategy.

SUMMARY