Ancient Times 1904 1960-1975

The first supply chain was the barter system Traces of outsourcing was seen when Charles S. Rolls became selling agent for cars made by F. Henry Royce The essence of SCM was understood with the first phase characterized as an inventory push era that focused primarily on physical distribution of finished goods Companies began migrating from an inventory push to a customer pull channel Emergence of SCM WalMart introduced the concept of Cross Docking Internet revolutionized the distribution system of the business Concept of e-commerce changed the definition of business
Module 1:Supply Chain Management

1975-1990 1980 198519961998-

MEANING OF SUPPLY CHAIN

It is a network of supplier, manufacturing, assembly, distribution and logistic facilities that performs the function of of procurement of materials, transformation of these materials in to intermediate and finished products and the distributions of these products to customer

MEANING OF SUPPLY CHAIN MANAGEMENT

It is a system approach to managing the entire flow of information, materials and services from raw materials supplier through factories and warehouses to the end customer

OBJECTIVE OF SUPPLY CHAIN MANAGEMENT

To maximise the overall value generated. Value generated is the difference between what final product is worth to the customer and the effort the supply chain expands in filling the customer request.

SUPPLIER

Information flow SUPPLIER Material flow

Information flow MANUFACTURER DISTRIBUTOR

Material flow Flexible System

Customer could be an internal customer or an external customer

Next, we see the processes performed in a supply chain as a CYCLE view

Module 1:Supply Chain Management

Cycle IV Supplier

Manufacturer

Customer

Retailer Cycle II

Distributor

Module 1:Supply Chain Management

It occurs at the customer/retailer

CUSTOMER ORDER CYCLE

CUSTOMER ARRIVAL

CUSTOMER ORDER RECEIVING

CUSTOMER ORDER ENTRY

CUSTOMER ORDER FULFILMENT

It occurs at the retailer & distributor

REPLENISHMENT CYCLE

RETAIL ORDER TRIGGER

RETAIL ORDER RECEIVING

RETAIL ORDER ENTRY

RETAIL ORDER FULFILLMENT

It occurs at the distributor and manufacturer

MANUFACTURING CYCLE

ORDER ARRIVAL

RECEIVING

PRODUCTION SCHEDULING

MANUFACTUR-ING AND SHIPING

It occurs at the manufacturer and supplier

PROCUREMENT CYCLE

ORDER BASED SCHEDULE

RECEIVING AT MANUFACTURER

SUPPLIER PRODUCTION SCHEDULING

COMPONENT MANUFACTURING/SHIPPING

Pull View of SCM Execution is initiated in response to a customer order Demand is known with certainty It is also reactive process because they react to customer demand Push View of SCM Execution in anticipation of customer order Demand is not known and must be forecast It may also be referred to as speculative process

PUSH PROCESS

CUSTOMER ORDER AND MANUFACTURING CYCLE

CUSTOMER

CUSTOMER ORDER ARRIVES

MANUFACTURER

PROCUREMENT CYCLE
PUSH PROCESS

SUPPLIER DELL SUPPLY CHAIN

FACES OF SUPPLY CHAIN MANAGEMENT BACK END

It comprises the physical building block It involves production, assembly and physical movement

Procur-ement

Manufa -cturing

Global

Distrib-ution

Logist-ics

PROCUREMENT DECISION
a Supplier Decision:
Where should be source raw materials, components and subassembles from.

b. Direct delivery from Suppliers:

Can intermediate warehouses can be estimated.

c. Vendor managed Inventories:

Should be inventories at the plants be vendor managed.

d. Optimal Procurement Policy:

What are the cost and services tradeoffs in alternative procurement strategies.

MANUFACTURING DECISION
a. Plant location:
How many manufacturing plants should be set up and where should be they located.

b. Product Line selection:

What products should be produced at each manufacturing location

c. Capacity planning:
How much capacity is needed in each plant.

d. Capacity Allocation:
How do we allocate plant capacity to products

e. Inventory Decision:
What raw materials/WIP/finished goods inventory should be stocked in each center.

f. Optimal manufacturing strategy:

What are the cost and service tradeoffs in alternative manufacturing strategies.

g Input Control:
How do we introduce work in the plant

h. Production Scheduling:
How do we schedule the production.

i Constrained supply:
How do we optimize resource utilization when the suppliers are not enough to fulfil the requirements

DISTRIBUTION DECISIONS
a. Configuration of distribution facilities:
What type of distributions centers are required.

b. Location:
Where should distribution facilities be located.

c. Customer Allocation:
Which customers should a facility service.

d. Facility configuration:
What product should be handled by each facility? What product and in how many quantities should be stocked at each facility? What should be the replenishment strategy

e. Optimal Distribution Strategy:

What are the cost and service tradeoffs of alternatives distribution strategies

LOGISTIC DECISION
a. Logistics mode selection:
a.What transport modes and lanes should be used to move products throughout the network.

b. Selection of ports:
Which ports should be used to bring product into and out of a country.

c. Direct Delivery: Which products should move directly from manufacturing centers to customer.

d. Optimal Transportation Strategy:

What are the cost and service tradeoffs of alternative transportation strategy

GLOBAL DECISION
a. Product & Process Selection

country.

b. Planning under uncertainty

c. Global Optimization of operations

d. Real time monitoring & Control

SUPPLY CHAIN DECISION

Strategic Decision
Location Inventory

Operational Decision
Transportation

Production

SUPPLY CHAIN DECISIONS

1. Strategic Decision
It is made over a longer time horizon It is closely linked to the corporate strategy and guide Supply chain policies from a design perspective.

2. Operational Decision
It is short term It focus on activities over a day to day basis.

1.Location Decision
Where production facilities, stocking points and sourcing points are located

2. Production Decision
What products to create at which plant, which suppliers will service those plants, which plants will supply specific distribution centres and how goods will get to the final customer

3. Inventory Decision
It maintained because to buffer against any uncertainty That might exit in the supply chain

4. Transportation Decision
What modes have been used for delivering the odds to the customers.

DECISION PHASES IN SUPPLY CHAIN MGMT 1.Supply Chain Strategy:

How to structure the supply chain What the chain configuration will be. What process each stage will perform. Strategic supply chain decisions are made 2. Supply Chain Planning: Operating policies are define. Constraints within each planning must be done. Planning must be I done for the coming year of demand in different markets.

it establishes parameters. Companies must include uncertainty in demand, exchange rates and competition.

3. Supply Chain Operation:

Time horizon here is weekly. Companies makes decision regarding individuals customers orders. Less uncertainty about demand information.

ELEMENTS OF SCM
1. Planning System
It facilitate order taking and information gathering

It focus on having the right product at right time and at the right place.

2. Planning System
It facilitate the physical movement of good and services It focus on operational efficiency and application based system.

3. Performance Measurement System

It make more informed decisions n respond to changing mkt condition The real focal point here are accounting n financial +mgmt system.

KEY FUNCTIONS IN SCM

Managing information about demand to enable a better understanding of the markets and customer needs.

1. Customer asset management function:

Managing the flow of physical goods from supplier. It include production planning, procurement and inventory management Managing the manufacturing process to ensure low production cost.

2. Integrated logistics:

3. Agile manufacturing:

Managing the financial flows with the supplier and customer through financial intermediaries.

4. Financial and Accounting management:

Custo mer

STRATEGIC
Channel Network Design Strategy

STRUCTURAL
WarehouTransport se design -ation
Material

FUNCTIONAL
Information Policies And Facilities System Procedures And Equipments Orgn Changem Mgmt

IMPLEMENTATION

SCM FRAMEWORK
1. Strategic
What are the basic and distinctive service need of the customers. What can SCM do to meet these needs Be used to provide unique services to the customer.

What should the SCM network look like What product should be sourced from which manufacturing location. How many warehouses should the company have and where should be located. What is the mission of each facility.

2. FUNCTIONAL

3. Functional

Operational details are decided.

4. IMPLEMENTATION
To give the means or authority to do something

FACTORS AFFECTING SUPPLY CHAIN MANAGEMENT

factors
Geographical
Cultural Govt Legislation

Time

SUPPLY CHAIN COMPONENTS

1. Procurement
Procurement cost is influenced by the: The way procurement decisions are made. Procedures adopted in the procurement process. Relationship with suppliers. Firms credibility. Market intelligence

1a. Material Requirement Planning

It will cover inventory requirements in the entire supply chain, including both firms and its suppliers

2. Processing
Focused on to manufacture standard products. Curtailing the huge inventory cost.

3.Warehousing Transportation

Management of demand i.e. to make available the right product, at the right place, at the right time and at the least cost.

3a. Demand Management

Anticipation of the customer requirements of customer products and fulfils that requirements against defined customer service needs.

FLOWS IN SUPPLY CHAIN MANAGEMENT

1. Value Flow
Moving largely from the vendor to customer. Flows as good flows and service flows.

Raw materials. Work in Process, Finished Goods. Intangible cannot be stored.

1a. Good Flows:

1b. Service Flows:

2. Information Flow
Flows from vendor to the customer and from the customer to the vendor.
a. Backward Flow. b. Forward Flow

3. Cash Flow
Money paid for goods and services received.

Raw Materials Inventory

Finished Goods Processing

Field stock

Customer Order

Value addition

Distribution

Manufacturing Procurement
Cost Addition

MAPPING SUPPLY CHAIN

MAPPING SUPPLY CHAIN

Value Added Activities
Conversion of raw materials in to final products

Non value added activities

Adding to the cost and the order performance cycle time

FUNDAMENTALS OF SUPPLY CHAIN MANAGEMENT

1.Single Entity
Reducing administrative delays and improving empathy across the supply chain.

2. Inventory perspective
According to traditional view: inventories have bee viewed as a buffer to reduce co-ordination requirements across activities. According to current concept: inventories is a buffer to be used as a last resort after ensuring proper information Sharing and co-ordination.

3.Strategic decision Making:

It facilitates strategic implication. It facilitates smoother and more reliable transport logistic in the long run

4.System Approach
It is a single integrated system.

5. Doing what one can do best:

It is important to focus on doing what one can do best.

THRUST AREAS OF SUPPLY CHAIN MANGEMENT

1. Improving Process quality 2.Minimising variety 3. Managing demand 4. Planning for multiple Supply Chains 5. Minimizing the number of stages. 6. Reducing lead time 7. Improving flexibility 8. Kitting of suppliers. 9. Focusing on A category. 10. Competing on service. 11. Moving from functions to process. 12. Taking an initiative Industry level

Push View of SCM

A push-based SCM takes longer to react to the changing market place In a push-based supply chain, production decisions are usually based on long-term forecasts In push-based strategies, SCM experience increased transportation costs, high inventory Pull View of SCM levels and high manufacturing costs In a pull-based supply chain, manufacturing is demand driven so that it is coordinated with actual external customer demand rather than a forecast Lead-time reduction occurs as the variabilities are better monitored in pull-based SCM Pull-based systems are often difficult to implement when lead times are so long that it is impractical to react to demand information

Module 1:Supply Chain Management