Supply Chain Management

Sarwat Halima Haider

Introduction

Supply Chain Management enclose all Logistics Management activities.

Importantly it also includes coordination collaboration with channel partners which can be suppliers, intermediaries, third party service providers and customers.

In essence, Supply Chain Management integrates supply and demand management within and across companies.

Introduction

It represents a conscious effort by the supply chain firms to develop and run supply chains in the most effective & efficient ways possible.

Supply chain activities cover everything from product development, sourcing, production, and logistics, as well as the information systems needed to coordinate these activities.

Introduction

SCM objectives: SCM outcomes:What?

Establish policies , objectives and

operating footprints.

How much?

Deploy resources to match supply

with demand .

When ? Where?

Schedule , monitor , control

and adjust production.

Do:

Build and transport.

Objectives.

Supply policies(service levels).

Network design.

Demand forecastProduction ,procurement &logistic plan

Inventory target.

Work center scheduling

Order/inventory tracking

Order cycle

Material movement.

Strategically

Tactical

Operational

Execution

Business value goals:

•Rapid demand fulfillment.

•Collaborative supply chain planning and

execution.

Customer value goals:

Give customer what they want , when and how they want it , at

low cost.

•Enterprise coordination of manufacturing and business

process.

•Effective distribution

system

•Responsiveness and

accountability to customers.

Goals of SCM

Links of SCM

The organizations that make up the supply chain are “linked” together through

1. Physical flows and

2. Information flows. Physical flows involve the transformation,

movement, and storage of goods and materials. They are the most visible piece of the supply chain.

Information system and SCM

Information flows allow the various supply chain partners to coordinate their long-term plans, and to control the day-to-day flow of goods and material up and down the supply chain.

Links of SCM

How information system facilitate SCM

Information from supply chain management system helps firms

Decide when and what to produce , how to store and move.

Rapidly communicate others. Track the status of orders. Check inventory availability and monitor

inventory levels.

How information system facilitate SCM

Reduce inventory , transportation and warehouse cost.

Track shipments. Plan production based on actual customer

demand. Rapidly communicate changes in product

design.

Concept of Supply Chain Management

The concept of Supply Chain Management is based on two core ideas.

The first is that every product that reaches an end user represents the “cumulative effort of multiple organizations”. These organizations are referred to collectively as the supply chain.

Concept of Supply Chain Management

The second idea is “to give best product to consumer” while supply chain have existed for a long time , most organizations have only paid attention to what was happening within their “four walls”. Very few organizations realized about delivering goods to final consumer .

Need of SCM

Supply chain management is as much a philosophical approach as it is a body of tools and techniques.

It typically requires a great deal of interaction and trust between companies to work.

Need of SCM

There are three major developments that have brought SCM to the forefront of management’s attention.

1. The information revolution

2. Increased competition and globalization in today’s markets

3. Relationship management

The Information Revolution

The late 1990s and early 2000s people saw the emergence of on-line “trading communities” that put thousands of buyers and sellers in touch with one another.

The old “paper”-type transactions are becoming increasingly obsolete.

The Information Revolution

At the same time, the growth of new telecommunications and computer technology has made prompt communications a reality.

Such information systems — like Wal-Mart’s satellite network — can link together suppliers, manufacturers, distributors, retail outlets, and ultimately, customers, regardless of location.

The Information Revolution

Such information systems — like Wal-Mart’s satellite network — can link together suppliers, manufacturers, distributors, retail outlets, and ultimately, customers, regardless of location.

Some examples

Increased Competition and

Globalization The second major trend is increased

competition and globalization of businesses. New competitors are entering into markets

that have traditionally been dominated by “domestic” firms.

At the same time, customers are demanding quicker delivery, state-of-the-art technology, and products and services better-suited to their individual needs.

Increased Competition and

Globalization To meet this challenge, managers are

seeking to find ways to rapidly expand their global presence.

They must position inventories so products are available when customers (regardless of location) want them, in the right quantity, and for the right price.

Increased Competition and

Globalization This level of

performance is a constant challenge to organizations, and can only occur when all parties in a supply chain are “on the same wavelength”.

Khaadi as Case Study

Relationship Management

The third major trend is relationship management, now the firms must manage the relationships with their upstream suppliers as well as their downstream customers.

SupplierSupplier ManufacturerManufacturer DistributorDistributor RetailerRetailer CustomerCustomer

UpstreamDownstream

Sectors of Industrial Supply Chains

The industrial supply chain consists of three key sectors:

1. Primary (or extractive) sector

2. Secondary (or manufacturing) sector

3. Tertiary sector

Sectors of Industrial Supply Chains

Some terminologies in SCM

Just in time Virtual Integration

Outsourcing Push versus pull

Just in time

Just-in-time (JIT) is an inventory strategy which companies adopt to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs.

The purpose of JIT production is to avoid the waste associated with overproduction, waiting and excess inventory.

Just in time

The key benefits of JIT are:

– Low inventory– Low wastage– High quality production– High customer responsiveness.

Just in timeA philosophy that seeks to eliminate all types of waste (like excessive

levels of inventory and waiting times)

Virtual Integration

Virtual integration is a new form of value chain management. Under such a system, the links of the value chain are brought together by informal arrangements among suppliers and customers.

Virtual Integration Today the vision for many manufacturers is

to become virtual companies, owning only the brand and the customer. The design, system development, product sourcing, logistics, and even final assembly can all be outsourced to supply chain partners.

Amazon.com was a virtual business pioneer. As an online bookstore, it delivered bookstore services without a physical retail store presence; efficiently connecting buyers and sellers without the overhead of a brick-and-mortar location.

Outsourcing

Outsourcing refers to the strategic decision to shift one or more of an organization’s activities to a third-party specialist.

This practice is used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally.

Outsourcing is an effective cost-saving strategy when used properly

Outsourcing

Outsourcing

Outsourcing

Push versus pull

In push based supply chain production and distribution decision are based on long term forecasts.

In pull based supply chain production and distribution decision are demand driven so that they are coordinated with true customer demand rather then forecast demand

Push versus pull

Push versus pull based supply chain models:Push model:

Supply to production based inventory based stock based purchase what Forecast on forecast on forecast on forecast is available

Pull model:

Supply to produce to order automatically automatically customer Order replenish replenish stock orders

warehouse

Supplier

Supplier Manufacturer Distributer Retailer

Manufacturer Distributer Retailer Customer

Customer

Summary

Summary

So we can say SCM is

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