Supply Chain Management Final

7/31/2019 Supply Chain Management Final

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Project Report

SUPPLY CHAIN MANAGEMENT

Under the guidance of

Prof.Ruchi Sharma

Submitted by:

Shruti Agarwal(131)

Manjot Singh(133)

Akashdeep Mohanty(132)

Aniket Das(271)


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Supply chain management

Various definations of Supply Chain Management (SCM) has been given by prominent persons and

organizations in the world . Let us look on some of them-

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 (Harland, 1996)

APICS Dictionary defines SCM as the "design, planning, execution, control, and monitoring of

supply chain activities with the objective of creating net value, building a competitive

infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring

performance globally."

Supply chain management is the integration of key business processes across the supply chain

for the purpose of creating value for customers and stakeholders (Lambert, 2008).

In simple terms Supply chain management (SCM) is the viewing of materials,information, and finances as they move in a process from supplier to manufacturer

to wholesaler to retailer to

consumer.


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As the diagram shows it is a continuous process - the producer even after selling its product goes for

feedback which helps to improve the efficiency of supply chain management process .Similarly the

consumer also search for information before buying the product. Every party at each step is involved in

rigorous interaction.

Why supply chain management??

However effective a product may be but unless and untill its useful in practical life its worthless.The

concept of SCM is no doubt very impressive and so is its applications.

Let us look at some of the major functions of SCM:-

Distribution Network Configuration: number, location and network missions of suppliers,

production facilities, distribution centers, warehouses, cross-docks and customers.

Distribution Strategy: questions of operating control (centralized, decentralized or shared); delivery

scheme, e.g.,direct shipment , pool point shipping,cross docking, DSD (direct store delivery), closed

loop shipping; mode of transportation, e.g.moto carrier, including truckload,LTL,parcel:railroad

intermodal transport, including TOFC (trailer on flatcar) and COFC (container on flatcar); ocean

freight; airfreight; replenishment strategy (e.g., pull, push or hybrid); and transportation control (e.g.,

owner-operated,private and common and contract carrier

Trade-Offs in Logistical Activities: The above activities must be well coordinated in order to

achieve the lowest total logistics cost. Trade-offs may increase the total cost if only one of the

activities is optimized. For example, full truckload (FTL) rates are more economical on a cost per

pallet basis than less than truckload (LTL) shipments. If, however, a full truckload of a product is

ordered to reduce transportation costs, there will be an increase in inventory holding costs which may

increase total logistics costs. It is therefore imperative to take a systems approach when planning

logistical activities. These trade-offs are key to developing the most efficient and effective Logistics

and SCM strategy.

Information: Integration of processes through the supply chain to share valuable information,

including demand signals, forecasts, inventory, transportation, potential collaboration, etc.

Inventory Management: Quantity and location of inventory, including raw materials, work-in-

progress (WIP) and finished goods.

Cash-Flow: Arranging the payment terms and methodologies for exchanging funds across entities

within the supply chain.


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HOW THE SUPPLY CHAIN WORKS

Production:Production refers to the capacity of a supply chain to make and store products. Thefacilities of production are factories and warehouses. The fundamental decision thatmanagers face when making production decisions is how to resolve the trade-offbetween responsiveness and efficiencyFactories can be built to accommodateone of two approaches to manufacturing:

1. Product focusA factory that takes a product focus performs the range ofdifferent operations required to make a given product line from fabrication ofdifferent productparts to assembly of these parts

2. Functional focusA functional approach concentrates on performing just a fewoperations such as only making a select group of parts or only doing assembly.These functions can be applied to making many different kinds of products. Aproduct approach tends to result in developing expertise about a given set ofproducts at the expense of expertise about any particular function. A functional

approach results in expertise about particular functions instead of expertise in agiven product

Warehouses too can be built to accommodate different approaches. There are threemain approaches to use in warehousing:

1. Stock keeping unit (SKU) storageIn this traditional approach, all of a giventype of product is stored together. This is an efficient and easy to understand wayto store products.

2. Job lot storageIn this approach, all the different products related to the needsof a certain type of customer or related to the needs of a particular job are storedtogether. This allows for an efficient picking and packing operation but usuallyrequires more storage space than the traditional SKU storage approach

3. Cross dockingAn approach that was pioneered by Wal-Mart in its drive toincrease efficiencies in its supply chain. In this approach, product is not actuallywarehoused in the facility. Instead the facility is used to house a process wheretrucks from suppliers arrive and unload large quantities of different products.These large lots are then broken down into smaller lots. Smaller lots of differentproducts are recombined according to the needs of the day and quickly loadedonto outbound trucks that deliver the products to their final destination

Inventory:Inventory is spread throughout the supply chain and includes everything from rawmaterial to work in process to finished goods that are held by the manufacturers,distributors, and retailers in a supply chainThere are three basic decisions to make regarding the creation and holding of inventory:

1. Cycle InventoryThis is the amount of inventory needed to satisfy demand forthe product in the period between purchases of the product. Companies tend toproduce and to purchase in large lots in order to gain the advantages thateconomies of scale can bring.


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2. Safety InventoryInventory that is held as a buffer against uncertainty. Ifdemand forecasting could be done with perfect accuracy, then the only inventorythat would be needed would be cycle inventory. But since every forecast hassome degree of uncertainty in it, we cover that uncertainty to a greater or lesserdegree by holding additional inventory in case demand is suddenly greater than

anticipated3. Seasonal InventoryThis is inventory that is built up in anticipation ofpredictable increases in demand that occur at certain times of the year

Location:Location refers to the geographical setting of supply chain facilities. The responsivenessversus efficiency trade-off here is the decision whether to centralize activities in fewerlocations to gain economies of scale and efficiency, or to decentralize activities in manylocations close to customers and suppliers in order for operations to be moreresponsive. When making location decisions, managers need to consider a range offactors that relate to a given location including the cost of facilities, the cost of labor,

skills available in the workforce, infrastructure conditions, taxes and tariffs, andproximity to suppliers and customers. Location decisions tend to be very strategicdecisions because they commit large amounts of money to long-term plans. Locationdecisions have strong impacts on the cost and performance characteristics of a supplychain. Once the size, number, and location of facilities are determined, that also definesthe number of possible paths through which products can flow on the way to the finalcustomer. Location decisions reflect a companys basic strategy for building anddelivering its products to market.

Transportation:This refers to the movement of everything from raw material to finished goods between

different facilities in a supply chain.There are six basic modes of transport that a company can choose from:

Ship, Rail, Pipelines, Trucks, Airplanes, Electronic Transport

Information:It is the connection between all of the activities and operations in asupply chain

1. Coordinating daily activitiesrelated to the functioning of the other four supplychain drivers: production; inventory; location; and transportation

2. Forecasting and planning to anticipate and meet future demands. Availableinformation is used to make tactical forecasts to guide the setting of monthly andquarterly production schedules and timetables


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MIS and SCM

Before relating MIS and SCM. Let us just know what MIS is

MIS (Management Information System)- is a system that provides information needed to manage

organizations effectively.

So clearly we could infer that MIS is all about managing information in a way that can be used for making

decisions.

In the modern business era there has been a trend among corporations to focus attention

on supply chain management in order to cut costs. This is largely due to an increase in

lower cost competitive products and services within a given industry. With such a high level

of competition in the market, businesses are forced to cut as many corners as they can to

ensure their products have a competitive pricing level while still maintaining consumer

appeal. To make this task easier and more efficient, managers have been implementing

their supply chain management strategies with MIS. This allows managers to focus on the

firms daily operations while MIS monitors what is happening and recommends what should

be done based on various facts and figures.

MIS SCM

Scm at various functional levelsStrategic level

Strategic network optimization, including the number, location, and size of warehousing, distribution

centers, and facilities.

Strategic partnerships with suppliers, distributors, and customers, creating communication channels

for critical information and operational improvements such as cross docking, direct shipping, andthird-

party logistics.

Product life cycle management, so that new and existing products can be optimally integrated into the

supply chain and capacity management activities.

Information technology chain operations.

Where-to-make and make-buy decisions.

Aligning overall organizational strategy with supply strategy.

It is for long term and needs resource commitment.


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Tactical level

Sourcing contracts and other purchasing decisions.

Production decisions, including contracting, scheduling, and planning process definition.

Inventory decisions, including quantity, location, and quality of inventory.

Transportation strategy, including frequency, routes, and contracting.

Benchmarking of all operations against competitors and implementation of best practices throughout

the enterprise.

Milestone payments.

Focus on customer demand and Habits.

Operational level

Daily production and distribution planning, including all nodes in the supply chain.

Production scheduling for each manufacturing facility in the supply chain (minute by minute).

Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the

forecast with all suppliers.

Sourcing planning, including current inventory and forecast demand, in collaboration with all

suppliers.

Inbound operations, including transportation from suppliers and receiving inventory.

Production operations, including the consumption of materials and flow of finished goods.

Outbound operations, including all fulfillment activities, warehousing and transportation to customers.

Order promising, accounting for all constraints in the supply chain, including all suppliers,

manufacturing facilities, distribution centers, and other customers.

From production level to supply level accounting all transit damage cases & arrange to settlement at

customer level by maintaining company loss through insurance company.


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THE EVOLVING STRUCTURE OF SUPPLY CHAINS

Participants in the Supply Chain:

1. Producers:Producers or manufacturers are organizations that make a product. Producerscan create products that are intangible or tangible.

2. Distributors:Distributors are companies that take inventory in bulk from producers and delivera bundle of related product lines to customers. Distributors are also known aswholesalers. For the customer, distributors fulfill the Time and Place functionthey deliver products when and where the customer wants them. A distributor istypically an organization that takes ownership of significant inventories ofproducts that they buy from producers and sell to consumers

3. Retailers:Retailers stock inventory and sell in smaller quantities to the general public. Thisorganization also closely tracks the preferences and demands of the customersthat it sells to

4. Customers:Customers or consumers are any organization that purchases and uses aproduct.

5. Service Providers:These are organizations that provide services to producers, distributors, retailers,and customers. Some common service providers in any supply chain areproviders of transportation services and warehousing services. Financial serviceproviders deliver services such as making loans, doing credit analysis, andcollecting on past due invoices.


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SUPPLY CHAIN OPERATIONS

SCOR model ofSupply Chain Operations:

SCOR stands forsupply chain operations researchThis model identifies fourcategories of operations

1. PlanThis refers to all the operations needed to plan and organize the operations inthe other three categories

2. SourceOperations in this category include the activities necessary to acquire the inputsto create products or services. We will look at two operations here. The first,


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procurement, is the acquisition of materials and services. The second operation,credit and collections, is not traditionally seen as a sourcing activity but it can bethought of as, literally, the acquisition of cash.

3. MakeThis category includes the operations required to develop and build the products

and services that a supply chain provides. Operations are included in thiscategory are: product design; production management; and facility andmanagement.

4. DeliverThese operations encompass the activities that are part of receiving customerorders and delivering products to customers. The two main operations are orderentry/order fulfillment and product delivery

Supply Chain Operations: Planning and Sourcing:There are four main operationsthat constitute the Planning process:

1. Demand Forecasting2. Aggregate Planning(purpose is to satisfy demand in a way that maximizes profit

for the company)3. Product Pricing4. Inventory Management

There are two main operationsthat constitute the Sourcing process:1. Procurement:

Purchasing

Consumption Management

Vendor Selection Contract Negotiation

Contract Management2. Credit and Collections (company uses to get its money)

Supply Chain Operations: Making and Delivering:Operationsthat constitute the Making process:

1. Product Design2. Production Scheduling3. Facility Management4. Operationsthat constitute the Delivering process:1. Order Management2. Delivery Scheduling


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DEVELOPING SUPPLY CHAIN SYSTEMS

After a company defines its supply chain strategy and sets the performance targets forthe markets it serves, the next step is to develop the systems needed to implement thestrategy. Often existing systems need to be enhanced and new systems need to bebuilt.

Designing Supply Chain Systems:The purpose of the design step is to flesh out the conceptual system design and createthe detailed system specifications. This step also creates the detailed project plan andbudget needed to build the system.By the end of the design step it is usually possible to predict the success or failure of theprojectThe phase begins with the project leader reviewing the project goal, the conceptualsystem design, and the objectives with the project work group. The work group is

composed of business and technical people who have the necessary mix of businessand technical skills and experience needed to do the detailed system design. It isimportant for the people to understand senior managements intentions and the projectsgoal. Specific issues relating to the project objectives and budget can be investigatedduring this phase. If necessary, adjustments can be made in light of the findings thatcome out of this phase

There are two main things that need to be done in the design phase:1. Create detailed process flow diagrams for the new system;2. Build and test the system prototype (i.e., the user interface and the technical

architecture).Use the technique called time boxing to lay out a work schedule and get things doneaccording to that schedule. Divvy up the time allotted to the total design step among thetwo major design activities. Break each activity into a set of tasks. Then give each taskthe time needed to do a competent job. Avoid the temptation to spend extra time doingexcessive amounts of analysis and checking and re-checking the results that come outof each activity.

Supply Chain Process Mapping:The project team should review the system performance criteria as described in thedefine phase. The criteria will be some mix of performance targets from the fourcategories:

1. Customer Service2. Internal Efficiency3. Demand Flexibility4. Product Development

System Prototyping to Design New SystemsOnce new process flows have been designed, system prototyping is a technique to useto design a new system that will effectively support these new processes. The process


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decomposition diagrams provide the processing logic and sequences to be used andindicate the kinds and volumes of data that the new system needs to handle.

There are two kinds of system prototypes:

user interface prototypes and

technical architecture prototypes

The System Design ProcessCreate the Detailed Project PlanCreate the Detailed Project BudgetThe Decision to Proceed . . . or Not to ProceedThe Project Office System Test and Roll Out

Supply Chain Management Final

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