The document discusses supply chain management (SCM), including defining SCM, the need for effective SCM, components of a SCM system, benefits of SCM, integration strategies like push and pull, and reasons for SCM failure. Key points covered include defining SCM as coordinating suppliers, manufacturers, warehouses and stores to minimize costs while meeting demand, listing the five main components of a SCM as plan, procure, make, deliver, and return, and describing push strategies like forecast-based production versus pull strategies driven by customer demand.

1. Naveen K Dandge
Vijay Swargam
Vinod Mishra
Vinayaka Ramesh

2. OUTLINE
•WHAT IS SUPPLY CHAIN MANAGEMENT?
•HOW IT LOOKS LIKE..?
•THE NEED FOR EFFECTIVE SCM
•IMPACT OF SUPPLY CHAIN
•COMPONENTS OF A SCM
•BENEFITS OF SCM
•DRIVING FORCES FOR SCM
•SUPPLY CHAIN INTEGRATION STRATEGIES
•REASON FOR FAILURE OF SUPPLY CHAINS

3. WHAT IS SUPPLY CHAIN MANAGEMENT?• SUPPLY CHAIN MANAGEMENT IS A SET OF APPROACHES UTILIZED TO EFFICIENTLY INTEGRATE
SUPPLIERS, MANUFACTURERS, WAREHOUSES, AND STORES, SO THAT MERCHANDISE IS
PRODUCED AND DISTRIBUTED AT THE RIGHT QUANTITIES, TO THE RIGHT LOCATIONS, AND AT
THE RIGHT TIME, IN ORDER TO MINIMIZE SYSTEM WIDE COSTS WHILE SATISFYING SERVICE
LEVEL REQUIREMENTS.
• THE DESIGN AND MANAGEMENT OF SEAMLESS, VALUE-ADDED PROCESS ACROSS
ORGANIZATIONAL BOUNDARIES TO MEET THE REAL NEEDS OF THE ENDCUSTOMER - INSTITUTE
FOR SUPPLY MANAGEMENT
• MANAGING SUPPLY AND DEMAND, SOURCING RAW MATERIALS AND PARTS, MANUFACTURING
AND ASSEMBLY, WAREHOUSING AND INVENTORY TRACKING, ORDER ENTRY AND ORDER
MANAGEMENT, DISTRIBUTION ACROSS ALL CHANNELS, AND DELIVERY TO THE CUSTOMER - THE
SUPPLY CHAIN COUNCIL

4. HOW IT LOOKS LIKE…?

5. THE NEED FOR EFFECTIVE SCM
•GREATER COMPETITIVE ADVANTAGE
•FASTER AND SMALLER DELIVERIES TO THE
INTERMEDIATE CUSTOMERS
•GREATER VALUE TO CUSTOMERS
•REDUCES THE LEAD TIME
•WELL MANAGED RISK IN THE SCM
•INCREASED CUSTOMER SATISFACTION

6. IMPACT OF SUPPLY CHAIN
•COMPAQ ESTIMATES IT LOST $0.5 B TO $1 B IN SALES IN 1995 BECAUSE
LAPTOPS WERE NOT AVAILABLE WHEN AND WHERE NEEDED
•P&G (PROCTOR&GAMBLE) ESTIMATES IT SAVED RETAIL CUSTOMERS $65
M (IN 18 MONTHS) BY COLLABORATION RESULTING IN A BETTER MATCH OF
SUPPLY AND DEMAND
•WHEN THE 1 GIG PROCESSOR WAS INTRODUCED BY AMD (ADVANCED
MICRO DEVICES), THE PRICE OF THE 800 MEG PROCESSOR DROPPED BY
30%

7. COMPONENTS OF A SCM
• 1. PLAN: STRATEGIC PLANNING HAS TO BE DONE TO HELP COMPANIES MANAGE ALL RESOURCES THAT
MOVE TOWARDS ACHIEVING CUSTOMERS' DEMAND FOR PRODUCTS AND SERVICES. IT ALSO ALLOWS
COMPANIES TO ACCURATELY FORECAST THE DEMAND FOR THEIR PRODUCTS.THIS ENSURES THAT THEY
DO NOT OVERPRODUCE OR UNDER PRODUCE AND ALLOWS THEM TO EARN MOREREVENUE. IF THE
COMPANY DOES NOT PLAN PROPERLY AND ENDS UP OVERPRODUCING, THEY WILL HAVE MORE INVENTORY
THAN NEEDED. THE INVENTORIES WHICH ARE NOT SOLD WOULD HAVE BEENA LARGE LOSS IN PROFITS
FOR THE COMPANY.
• 2. PROCUREMENT: COMPANIES SOURCE AND CHOOSE SUPPLIERS TO DELIVER THE PRODUCTS AND
SERVICES THEY NEED TO CREATE THEIR PRODUCT. IT ALSO INVOLVES THEMANAGEMENT OF THE
INVENTORY OF GOODS AND SERVICES RECEIVED FROM THE SUPPLIERS ANDMONITORS SHIPMENTS,
VERIFYING THEM, TRANSFERRING THEM TO THE MANUFACTURING FACILITIES AND AUTHORIZING
SUPPLIER PAYMENTS, AS WELL AS BENCHMARKING AGAINST COMPETITORS TO ENSURE THE
IMPLEMENTATION OF THE BEST POLICIES.

8. COMPONENTS OF A SCM
• 3. MAKE: THIS IS THE MANUFACTURING STEP, WHERE ACTIVITIES NEEDED FOR PRODUCTION, TESTING, PACKAGING
AND PREPARATION FOR DELIVERY HAVE TO BE SCHEDULED. THIS IS A CRITICAL PART OF SUPPLY CHAIN, WHERE
COMPANIES ARE ABLE TO MEASURE QUALITY LEVELS, PRODUCTION OUTPUTAND WORKER PRODUCTIVITY.
• 4. DELIVER: THIS IS WHERE THE PARTIES MOVE PRODUCTS FROM ONE PLACE TO ANOTHER. THIS IS DONE BY
COORDINATING THE RECEIPT OF ORDERS FROM CUSTOMERS, DEVELOP A NETWORK OF WAREHOUSES, PICK
CARRIERS TO GET PRODUCTS TO CUSTOMERS AND SET UP AN INVOICING SYSTEM TO RECEIVE PAYMENTS. DELIVERY
IS ALSO REFERRED TO AS LOGISTICS, WHEREBY IT IMPLEMENTS AND CONTROLS THE FORWARD AND REVERSE FLOW
AND STORAGE OF GOODS, SERVICES AND INFORMATION BETWEEN SUPPLIERSAND CONSUMERS, THUS ENSURING
THAT THE DEMAND OF THE CONSUMERS ARE MET.
• 5. RETURN: THIS IS ALSO REFERRED TO AS REVERSE LOGISTICS BRINGING IT BACK WHEN IT’S NOT NEEDED
(UPSTREAM FLOW). RETURN OFTEN GIVES PROBLEMS TO COMPANIES. THISIS WHERE SUPPLY CHAIN PLANNERS
HAVE TO CREATE A FLEXIBLE NETWORK FOR RECEIVING DEFECTIVE AND EXCESS PRODUCTS BACK FROM CUSTOMERS
AND SUPPORTING CUSTOMERS WHO HAVE PROBLEMS WITH DELIVERED PRODUCTS.

9. BENEFITS OF SCM
• SIGNIFICANT BUSINESS IMPROVEMENTS.
• INCREASE IN REVENUE GROWTH.
• REDUCTION IN COSTS AND CAPITAL ASSETS.
• EFFICIENT ALLOCATION OF RESOURCES.
• REDUCE CYCLE TIME (THE PERIOD REQUIRED TO COMPLETE ONE CYCLE OFAN OPERATION).
• NO TIME IS WASTED IN FORECASTING.
• EFFICIENT MARKET RELEASE.
• MORE FLEXIBILITY IN DEALING UNFORESEEN PROBLEMS.
• MEET DEMANDS OF CONSUMERS.
THESE WILL ALSO ENHANCE THE CREDIBILITY WITH STAKEHOLDERS AND INVESTORS.

10. DRIVING FORCES FOR SCM
• TECHNOLOGIES: TECHNOLOGIES ADVANCEMENT AND IMPROVEMENTS ALLOW ORGANISATIONS TO ACTIVELY MANAGE
EFFECTIVELY AND EFFICIENTLY.
• CUSTOMER BEHAVIOURS: CUSTOMERS ARE CONSTANTLY DEMAND LOWER PRICES AND BETTER PRODUCTS AND
SERVICES. FIRMS ARE CONSTANTLY TRYING TO IMPROVE SUPPLY CHAIN TOMEET THEIR DEMANDS.
• VISIBILITY: MORE VISIBLE MODELS OF DIFFERENT WAYS TO DO THINGS IN THE SUPPLY CHAIN HAVE EMERGED.
• COMPETITION: INCREASED COMPETITION WILL MAKE ANY ORGANISATION THAT IS IGNORING ITS SUPPLY CHAIN AT A
DISADVANTAGE.
• SPEED: AS THE PACE OF BUSINESS INCREASES THROUGH ELECTRONIC MEDIA, ORGANISATIONS SUPPLY CHAIN MUST
RESPOND EFFICIENTLY, ACCURATELY AND QUICKLY.
• GLOBALIZATION: GLOBAL NETWORK SOURCING, MANUFACTURING, MARKETING AND DISTRIBUTION. ORGANISATION
WILL LOOK FOR CHEAPER ALTERNATIVES GLOBALLY THAT ARE BEST FOR THE ORGANISATION E.G. OUTSOURCING.

11. SC INTEGRATION – PUSH STRATEGIES
•CLASSICAL MANUFACTURING SUPPLY CHAIN STRATEGY
•MANUFACTURING FORECASTS ARE LONG RANGE
– ORDERS FROM RETAILER’S WAREHOUSES
•LONGER RESPONSE TIME TO REACT TO MARKETPLACE CHANGES
– UNABLE TO MEET CHANGING DEMAND PATTERNS
–SUPPLY CHAIN INVENTORY BECOMES OBSOLETE AS DEMAND OF CERTAIN PRODUCTS
DISAPPEAR

12. SC INTEGRATION – PUSH STRATEGIES…
•INCREASED VARIABILITY(BULLWHIP EFFECT] LEADS TO
– LARGE INVENTORY STOCKS
–LARGER AND MORE VARIABLY SIZED PRODUCTION BATCHES
–UNACCEPTABLE SERVICE LEVELS
–INVENTORY OBSOLESCE
•INEFFICIENT USE OF PRODUCTION FACILITIES
– HOW IS DEMAND DETERMINED? PEAK? AVERAGE?
–HOW IS TRANSPORTATION CAPACITY DETERMINED?
•EXAMPLE: AUTO INDUSTRY, LARGE APPLIANCES ETC.

13. SC INTEGRATION – PULL STRATEGIES
•PRODUCTION AND DISTRIBUTION ARE DEMAND DRIVEN
– COORDINATED WITH REAL CUSTOMER DEMAND
•NONE OR LITTLE INVENTORY HELD
– ONLY IN RESPONSE TO SPECIFIC ORDERS
•FASTER INFORMATION FLOW MECHANISMS – POS DATA
•DECREASED LEAD TIMES
•DECREASED RETAILER/MANUFACTURERS’ INVENTORY
•MORE EFFICIENT USE OF RESOURCES
•EXAMPLES: DELL, AMAZON

14. PUSH VS PULL STRATEGIES
PUSH PULL
Objective Minimize costs Maximize service level
Complexity High Low
Focus Resource Allocation Responsiveness
Lead Time Long Short
Processes Supply Chain Planning Order Fulfillment

15. REASON FOR FAILURE OF SUPPLY CHAINS
•LACK OF CO-OPERATION AMONG DIFFERENT MEMBERS OF THE SUPPLY CHAIN.
•LACK OF COMMUNICATION AND TRUST.
•PRODUCTS AND MARKETING STRATEGIES OF COMPANIES DO NOT CORRESPOND
WITH THE NEEDS OF THE CUSTOMERS.
•LONG LEAD TIME CAUSING DELAYED DELIVERY.
•LACK OF RISK MANAGEMENT STRATEGIES.
•INABILITY TO COORDINATE AND SYNCHRONIZE DISPARATE BUSINESS
PROCESSES AROUND THE WORLD WELL.