Supply Chain Management

PRESENTATION BY

3rd

AKHILESH GUPTA(48)
DILEEP KR JHA(28)
C N MAHESHWARI(31)
PAWAN MAKKAR(30)
SANDEEP KUMAR(27)
Sem MBA(Weekend) Sec-A

Supply Chain Management

Efficient and effective integration of
suppliers, manufacturers, warehouses,
stores, and transportation intermediaries into
a seamless value chain.
Merchandise is produced and distributed in
the right quantities; to the right locations;
and at the right time.
Minimization of system wide
costs, while satisfying the
service levels their
customers require.
2

Objectives of Supply Chain

To reduce the physical supply chain links
To define supply chain responsibilities to a
core service competency
To decrease the time and cost of getting
end user customer products in required
quantity at the place of requirements.

Customer value
goals:
Give customer
what they want ,
when and how they
want it , at low
cost.

Business value
goals:
Rapid demand
fulfillment.
Collaborative
supply chain
planning and
execution.

Enterprise
coordination of
manufacturing
and business
process.

Effective
distribution
system

Objectives of SCM
4

Responsiveness
and
accountability to
customers.

Why is SCM Important?

Strategic Advantage It Can Drive

Strategy
* Manufacturing is becoming more efficient
* SCM offers cost reduction (Wal-Mart or Big Bazaar)
Globalization It Covers The World

* Requires greater coordination of production and

distribution
* Increased risk of supply chain interruption
* Increases need for robust and flexible supply
chains
5

Why is SCM Important?

(continued)
At the company level, supply chain

management impacts
* COST For many products, 20% to 40% of total
product costs are controllable logistics costs.
* SERVICE For many products, performance
factors such as inventory availability and speed of
delivery are critical to customer satisfaction.

What is Supply Chain Planning ?

There is need for a mechanism through which the
execution of various business activities along a supply
chain can be planned in an integrated fashion.

The supply chain planning is an effort to achieve the

primary goal of producing and distributing the
merchandise at the right quantity, to the right
locations, and at the right time with minimum system
wide cost in the presence of conflicting goals of various
business units
7

upstream
suppli
er
suppli
er

suppli
er

suppli
er

manufactu
rer

distribut
er

retail
er

suppli
er

downstream
suppli
er

fig: an example of supply chain.

8

custom
er

Supply Chain Planning Processes

Material Requirement Planning
Component
Requirement

Supplier

Demand Forecasting

Production
Plan

Plant

Warehouse

Logistics

Order Management
9

Demand Planning

Retailer

Dynamics of Order Flow

10

Supplier

Plant

Warehouse

Logistics

Retailer

Dynamics of Material Flow

11

Supplier

Plant

Warehouse

Logistics

Retailer

12

Demand driven supply chains

Push versus pull based supply chain models:
Push model:

Supplier

Supply to
purchase what
Forecast
available

Manufactur
Distribute
Retailer
er
r inventory based
production
based
on forecast

on forecast

Custome
r
stock based
on forecast

is

Pull model:
Supplier
Supply to
customer
Order
orders
warehouse
13

Manufactur
er
produce to order

Distribute
r

Retailer

Customer

automatically

automatically

replenish

replenish stock

Information system and

SCM

Supply chain activities cover every thing from

product development , sourcing , production and

logistics as well as information system.
The organizations that make up supply chains are
linked through physical flow and information flow.
Physical flow involves transformation , movement
and storage of goods & materials .
Information flow allows various supply chain
partners to co-ordinate their long term plans and
control day to day flow of goods and materials
forward and backward.
One of the strategy to effective mgmt of supply
chain is just-in-time strategy.
14

Information Flows

15

How information system facilitate

SCM
Information from supply chain management
system helps firms
Decide when and what to produce , store and
move
Rapidly communicate others
Track the status of orders
Check inventory availability and monitor inventory
levels.
Reduce inventory , transportation and warehouse
cost
Track shipments
Plan production based on actual customer demand
Rapidly communicate changes in product design.
16

Supply chain management

software

Supply chain planning system: it enables the firms

to model its existing supply chain , generate

demand forecast for product and develop optical
sourcing and manufacturing plans.
Supply chain execution system: it manage the
flow of products through distribution centers and
warehouse to ensure that products are delivered
to right location in most efficient manner.
Supply chain management software vendors are
SAP , Oracle PeopleSoft, Manugistics , i2
technologies etc.

17

 Bullwhip Effect - The built up inventory in

an uncoordinated channel where retailers
and vendors do not coordinate their supply
chain activities
What Causes a Bullwhip Effect?
Delays in transmitting orders and receiving
merchandise
Over-reacting to shortages
Ordering in batches rather than generating
a number of small orders

18

GLOBAL SUPPLY CHAIN AND

INTERNET
Intranet is used by firms to improve

coordination among their internal supply

chain process and they use extranet to
coordinate among business partners and
customers .

19

USE OF INTERNET IN SCM

Order
processing

Planning
and
scheduling

Supplier
s

Procurement
Customer
s
Logistics
service
Shipping
Production

Retailers
Inventory
20

Distributo
rs

Future internet driven supply chain

operates like a digital nervous system.
Distributors
Retailers

Manufacturers

Suppliers

Private
industrial
networks
Net market
place
21

Virtual
manufacturer
s

Contract
manufactures

Logistic
provider
s

Customers

Logistics
exchange

Uncertainty in Supply Chain

Wrong Forecasts
Late Deliveries
Poor Quality
Machine Breakdowns
Canceled Orders
Erroneous information

22

Managing Uncertainty
Point forecasts are invariably wrong

Plan for forecast range use flexible

contracts to go up/down.
2. Aggregate forecasts are more accurate

Aggregate the forecast

postponement/risk pooling
1.

23

Managing Uncertainty
(contd)
3.

4.

24

Longer term forecasts are less accurate

Shorten forecasting horizons multiple

orders; early detection
In many cases, somebody else knows
what is going to happen

Collaborate

Complexities Involved in
Supply Chain Management
The supply chain is a complex network

of facilities and organizations with

different, conflicting objectives
Matching supply and demand is a major
challenge
System variations over time are also an
important consideration
Many supply chain problems are new
and there is no clear understanding of
all the issues involved
25

Thank You

26