1. Supply Chain Management

2. Changing Business environment
Global elements.
• Consumers taste and preference has
changed.
• Demand supply.
• Powerful economic alliance.
• Opening of eastern block countries
and European union.

3. Government influence
• Deregulation
• Tax and duty structure.
• Exemption for SSI.
• Environmental protection laws

4. Macro economic factors
• Interest rates.
• Exchange rates
• Inflation rates.
• Saving rates.
• Trade deficit / surplus.
• Budget deficit / surplus.

5. Technological innovation
• Process innovation
• Industrial disasters
• IT revolution

6. This resulted in,
• Threat to new entrants
• Bargaining power of the buyer
• Bargaining power of supplier
• Threat of substitute

7. Further it resulted in,
• Expansion of business.
• Merger with another company.
• Acquisition with another company.
• Strategic alliance.

8. Traditional S.C.M. approach – MRP AGE
Supplier Others Planning Production Sales Customer

9. MRP – II Resource planning
Supplier Others Plan / purchase / Production Sales
Customer

10. S.C.M. approach – ERP age
Supplier Manufacturer Dist. Center Retailer Consumer

11. Modern S.C.M. approach
Supplier Manufacturer Distribution center Retailer Consumer

12. Concept of S.C.M.
• The primal focus of SCM is to serve
consumer with excellent goods &
services against minimum possible
costs and minimum time.
• All the trading partners in supply chain
share long term mutually beneficial
vision

13. • All the SCM decisions are inter-dependent
amongst the trading partners and not
dependent or dependent in nature.
• SCM is the demand driven situation where
consumer defines his requirements and
orders. Hence the demands generated in
SCM are either based in the live consumer
order or the past consumer orders.
• SCM strongly adheres to the lean thinking,
thus the manufacturing philosophy will be
single piece flow & batch size reduction.

14. • The order fulfillment mechanism of
SCM will be to cater actual consumer
needs or to replenish the sales of
immediate past.
• The integrated planning & execution
across Supply chain will result into
proper utilization of the inventory &
other resources.
• SCM performs is heavily based on
sophisticated IT systems & knowledge
workers

15. • The success level of SCM is the
outgrowth of the combined results of
performance of the individual trading
partners.
• It is necessary to restructure the
organization and the relationship of the
company with suppliers, distributors and
all others who participate in value
creation process.

16. Definition
A supply chain consists of all the entities
necessary to transform ideas into
delivered products or services.Supply
chain management directs and
transforms a firm’s resources in order to
design, purchase, produce and deliver
high quality goods and services.

17. • Supply chain management I a paradigm
driving many businesses.
• After globalization push business is
replaced by pull business.
• Supply chain consists of, all parties
directly or indirectly, fulfilling customers
request.
• Supply chain management encompasses
all activities with the flow of
transformation of goods from raw material
stage through end users as well as
associated information flows.

18. • Information flows in up & down
direction.
• Directly involved in Supply chain
management activity are :-
a) Customer.
b) Retailer.
c) Distributor.
d) Manufacturer.
e) Supplier.

19. • Indirectly involved in Supply chain
management are :-
a. Product development.
b. Marketing.
c. Operations.
d. Finance.
e. Human Resource.
f. Customer service.

20. Supply chain management deals with the
issues throughout the chain from
supplier to customer.
S.C.M. objective is to simplify the
supply chain to control cost, improve
total quality, maximize customer service
& increase profit.
S.C exists in both service &
manufacturing organizations.
The complexity of the chain may
vary from industry to industry.

21. Strategic phase :-
company decides how to structure the
supply chain over the next years. It decides
what the chains configuration will be, how
resources will be allocated, what processes
will be performed at each stage. At this
level it is viewed from outsourcing point of
view, whether to manufacture in house or
outsource it. Such decisions are long term
decisions they cannot be changed with
short term notice.

22. Supply chain planning :-
the strategy is already finalized. Planning
include making decisions regarding which
markets will be supplied from which
location, the subcontracting &
manufacturing plan, inventory policies etc.
The timing & size of marketing & price
promotion etc.

23. Supply chain operations :-
At this level the time horizon is weekly or
sometimes daily also. During this phase,
firms allocate inventory or production to
individual orders. Set order dates, generate
picking lists allocate an order to an shipping
mode & shipment, set delivery schedules of
trucks & the replenishment. Operational
decisions are made in short term.

24. S.C.M principles :-
• Compress the structure by reducing no
of members in the chain.
• Speeding up the activity – reducing the
time between two activities.
• Integrate the activities – pooling them.
• Collaborate & co-operate

25. Key elements of S.C.M. :-
• Production – what, when & how many
to produce.
• Supply – what can be supplied
economically & efficiently & of the good
quality.
• Inventory – levels at raw material, work
in progress, finished goods.
• Location – place of production, tax
structure, distribution modes etc

26. • Transportation for smooth supply
Air – ship – railway – road. This needs
to be reviewed from time & expense
point of view.
• Information – Linking of computers
through networks and Internet and
streamlining the information flow.
a. MRP.
b. SAP.
c. ERP etc.

27. Benefits of S.C.M.
• Reduced supply cost.
• Reduction in throughput time.
• Better returns on investment.
• Improved customer service.
• Reduction in inventory.
• Improved profit margins.