Value Chain and supply Chain

The difference between a value chain and a supply chain is that a supply chain is the process
of all parties involved in fulfilling a customer request, while a value chain is a set of
interrelated activities a company uses to create a competitive advantage.
The idea of value chain was pioneered by Michael Porter. Five steps in the value chain give a
company the ability to create value that exceeds the cost of providing its good or service to
customers. Maximizing the activities in any one of the five steps allows a company to have a
competitive advantage over competitors in its industry. The five steps or activities are
inbound logistics, operations, outbound logistics, marketing and sales, and service.
Inbound logistics include receiving, warehousing and inventory control. Operations include
value-creating activities that transform inputs into products. Outbound logistics include
activities required to get a finished product to a customer. Marketing and sales are activities
associated with getting a buyer to purchase a product. Service activities include those that
maintain and enhance a product's value, such as customer support.
The supply chain comprises the flow of all information, products, materials and funds
between the different stages of creating and selling a product. Every step in the process, from
creating a good or service, manufacturing it, transporting it to a place of sale, and then selling
it is a company's supply chain. The supply chain includes all functions involved in receiving
and filling a customer request. These functions include product development, marketing,
operations, distribution, finance and customer service.
What are 'Logistics'
Logistics is the general management of how resources are
acquired, stored and transported to their final destination.
Logistics management involves identifying prospective
distributors and suppliers, and determining their
effectiveness and accessibility.
Ultimately, management establishes a relationship with the
appropriate companies or handles its own logistics if it is
more cost-effective to do so.
 Banking terms

Reference Material
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CPI and WPI
CPI (Consumer Price Index) - This measures the price levels at the
consumer levels. We want to see whether our workers are able to buy
things at an affordable price. So, you take up the price of a bunch of
important things (food, rents, petrol etc) from last year and compare
the prices of those same things this year.
WPI (Wholesale Price Index) is pretty much like CPI but measure
what manufacturers pay for their stuff. We want to see if our factories
can afford to buy their raw materials. WPI often runs parallel to CPI,
but not always. For instance, as of Feb 2015 prices of raw materials
are going down [WPI is down] while the CPI is still growing - as the CPI
is also impacted by things like rent and other consumer stuff that are
not going down.
IIP - (Index of Industrial Production)
The Index of Industrial Production (IIP) is an index for India which
details out the growth of various sectors in an economy such as
mining, electricity and manufacturing.
Think of this as the diet that leads to the growth in muscular mass.
What if I measure the protein intake you had? If your protein intake is
high, then at some point your muscle is likely to grow big. In the same
way, if the IIP is high then the GDP is likely to grow up at some point.
That said, the relationship is not always linear.
Electronics & IT
Bullwhip effect
The bullwhip effect is a distribution channel phenomenon in which forecasts yield
supply chain inefficiencies. It refers to increasing swings in inventory in response
to shifts in customer demand as you move further up the supply chain.
These errors magnify as you move upstream from the Retailer node to Factory, in
the form of an increasing ripple, the sort you can make with a Bullwhip, hence
the name Bullwhip effect.
Why do these errors magnify, you ask? Let's say I am a retailer and I predict
customer demand for a certain unit to be 10 units. I am based far away from you,
the wholesaler, and it takes two weeks for you to supply me with the stuff that I
require. So, you'll have to plan not only for my immediate demand (10 units), but
also for my future demand. So you'll produce more units, not just for me, but for
other retailers as well, because, hey, I am not the only one you are serving. So
instead of producing just 10 units for me, you plan for 20. You send your demand
numbers to the distributor, and the whole process repeats itself.
ABC analysis - based on Pareto's law
ABC analysis is used to simplify and organize your requirements.
For suppose Consider an Inventory as it is the most common place where it is applied in Supply Chain perspective.
ABC analysis states that, in your Inventory
Class A items include all high revenue products, which typically account for about 80 percent of annual sales ($) and represent
about 20% of the inventory SKU's.
Class B items include all medium revenue products, which typically account for 15 percent of annual sales ($) and represent about
30% of the Inventory SKU's.
Class C items include all low revenue products, which generally account for 5 percent of annual sales ($) and represent about 50%
of the Inventory SKU's.
The Percentage ratio applied for ABC categories is typical although not absolutely fixed little variation possible, but the quantities
might vary according to your requirements.
For Example : You can say that 80% of the warehouse space is occupied by 20% of the products for Class A items and accordingly
for Class B and Class C.
Hence, it is a general methodology to bifurcate your products to easily differentiate things.
ERP (enterprise resource planning)
ERP software (business process-management software) modules can
help an organization's administrators monitor and manage supply
chain, procurement, inventory, finance, product lifecycle, projects,
human resources and other mission-critical components of a business
through a series of interconnected executive dashboards. In order for
an ERP software deployment to be useful, however, it needs to be
integrated with other software systems the organization uses. For this
reason, deployment of a new ERP system in-house can involve
considerable business process reengineering, employee retraining
and back-end information technology (IT) support for database
integration, data analytics and ad hoc reporting.
Why ERP implementation is a
challenging task ?
The main reason why ERP implementations are challenging that it
changes the way a company works. Not its business processes but the
way the process is carried out.
Another challenging aspect is the amount of money, effort and time
involved.
Then you have reluctance from the employees. They are used to the
current process that they carry out today. Implementing ERP means
that they will have to come out of their comfort zones and learn
(make effort) a new thing aka reluctance to change.
challenging thing is to manage the implementation.
 Supply Chain
Supply Chain is a combined network of activities and resources involved in moving raw
material,components,finished products from the original supplier to end user. A supply
chain consists of all parties involved directly or indirectly,in fulfilling a customer request.

Supply chain management (SCM) is the active streamlining of a business' supply-side

activities to maximize customer value and gain a competitive advantage in the
marketplace. SCM represents an effort by suppliers to develop and implement supply
chains that are as efficient and economical as possible. Supply chains cover everything
from production, to product development, to the information systems needed to direct
these undertakings.
Supply Chain Management encompasses the planning and management of all activities
involved in sourcing and procurement, conversion, and all logistics management
activities. Importantly, it also includes coordination and collaboration with channel
partners, which can be suppliers, intermediaries, third-party service providers, and
customers.
Operational Management
The design, execution, and control of operations that convert resources into desired goods and
services, and implement a company's business strategy.
Operations management refers to the administration of business practices to create the highest
level of efficiency possible within an organization. It is concerned with converting materials and
labor into goods and services as efficiently as possible to maximize the profit of an organization.
Operations management teams attempt to balance costs with revenue to achieve the highest net
operating profit possible.

It involves wide range of activities

Factory/Plant Maintainance
Input Procurement
Inventory and raw material shipping
Inventory Control
Quality assurance
Equipment maintaince
Industrial Engineering
Industrial engineering is the branch of engineering that involves figuring
out how to make or do things better, they engineer processes and systems
that improve quality and productivity.It deals with the optimization of
complex processes, systems or organizations. Industrial engineers are
concerned with reducing production costs, increasing efficiency, improving
the quality of products and services, ensuring worker health and safety,
protecting the environment and complying with government regulations.
They "work to eliminate waste of time, money, materials, energy and other
commodities," according to the Institute of Industrial Engineers. For
example, industrial engineers may work to streamline an operating room,
shorten a roller-coaster line, make assembly lines safer and more efficient,
and speed up the delivery of goods.
It is an interdisciplinary engineering
The Theory of Constraints is a methodology for identifying the most important limiting
factor (i.e. constraint) that stands in the way of achieving a goal and then
systematically improving that constraint until it is no longer the limiting factor.
Eliyahu M.Goldratt
 SKU stands for Stock Keeping Unit which is an individual item, such as
a product or a service that is offered for sale. The item is represented
by a unique code specific to the company that sells the item. The SKU
includes specific details about the product such as product size
variation and unlike a barcode it is human readable. The SKU is
unique to each product and variations within a product range. The
chief benefit of using a SKU code is that businesses can take much
more accurate inventories.