Presented By-

Shahidul Asif 06

Shabib Raihan              13

Tanjil Amin                  31

Sadman Prodhan           47

Salman Hossain Khan    56

Supply Chain Management

Supply Chain is the flow of materials from supplier to customer through- • Procurement• Manufacturing• Distribution• Sales & Disposal

Supply chain activities transform raw materials and components into a finished product that is delivered to the end customer.

•Developed in 1980s.

•Supply chain management (SCM) is the process of-

-Planning,-Implementing,-Controlling

the operations of the supply chain as efficiently as possible.

Supply Chain Management

Dynamics of Material Flow

Supplier Plant RS Logistics Retailer

SCM FLOWS

MATERIAL

MONEY

INFORMATION

Procurement Manufacturing Distribution Customer

Supply Chain RelationshipSupply Chain Relationship

What is SCM ?What is SCM ?

BuyingBuying

SellingSelling

MakingMakingMovingMoving

Warehousing

Warehousing

SCM is a business network covering from buying, making, moving, warehousing to selling

Traditional SCM

Supply Chain Decisions

OPERATIONAL

TACTICAL

STRATEGIC

Procurement DistributionManufacturing Logistics

Cost

Reduced inventories

Reduced waste

Reduced total system costs Service

Establishment of a collaborative framework

Near real time information flow

Reduced variation and increased quality

Business growth opportunities

Preferred source for new opportunities

Expanded benefits to other customers

Supply Chain Benefits

The 3 Ts

Key IngredientsFor ImprovingSupply ChainEfficiencies

TimelinessVelocity

Acceleration

Trust

Collaboration

Empowerment

SharingInformation(eg. open schedules)

Accountability

Understanding the process

Transparency Ability to see the real situation

The Three T’s

Transactional Efficiency

Critical Data to improve:

Multiple handling

Transit damageProcess delays

Excess freight

DelaysEnd-to-end cycle-time

Warehouse fees Inventory turns

Yield

Late Deliveries

Perceived Value

Intrinsic Value

The Supply Chain “Iceberg”

SCM FOCUS / LEARNINGS

• SERVICE COST

• FLOW OF INFORMATION, MATERIAL AND CASH

• INPUTS AND OUTPUTS

ELEMENTS OF SCM

• INVENTORY MANAGEMENT

• WAREHOUSING

• TRANSPORTATION

ShortageExcess

1. The stock of material lying with producer for which payments are made but which are yet to be delivered to the customers and paid for by them.

2. Material stocked to meet the expected demand in the market.

3. An idle resource which locks the capital.

What is inventory

ShortageExcess

Why inventories are necessary

1. To satisfy the customer demands without time lag.

2. To cover time required for procurement of material.

3. To cater to fluctuations in demand.

4. Seasonal demand of products.

5. Production constraints of suppliers.

6. To retain supplier goodwill.

FSN AnalysisBased on speed of movement of material.

1. Some materials have regular and high volume demand and move

‘Fast’ (F),

2. some material have intermittent and unpredictable demand and

hence move ‘Slow’ (S)

3. and a few items have practically no takers and hence keep on lying

in stores for long period of time and categorized as ‘Non moving’

(N).

FAST MOVING SLOW MOVING NON MOVING

ELEMENTS OF SCM

• INVENTORY MANAGEMENT

• WAREHOUSING

• TRANSPORTATION

ELEMENTS OF WAREHOUSING

• LOCATION

• LAYOUT

• IDENTIFICATION

• MATERIAL HANDLING

Warehousing principles

• Ease of receipts, storage and issues.

• Uninterrupted movement of material,

men and equipment.

• Optimum utilization of space.

• Ease of locating the material.

• Safety. & Security.

• Better supervision.

• Flexibility

• Building. : Preferably single storied,

enough height, proper lighting and

ventilation, protection against

hazards like fire and lightening.

ELEMENTS OF SCM

• INVENTORY MANAGEMENT

• WAREHOUSING

• TRANSPORTATION

Logistics Management

'Logistics is the process of strategically managing

the procurement, movement and storage of materials

(and related information flows) through the

organization and its marketing channels

Objectives of Transport Management

1. Cost Optimization

2. Improved service

3. Transportation/logistics as a competitive

differentiator.

4. Time to market

CARRIER SELECTION

OUTSOURCING Vs. OWN VEHICLE

VEHICLE TYPE ( SIZE )

CUSTOMERS PER VEHICLE & TRIPS

PER VEHICLE( ROUTING )

Carrier Selection and Routing

• The practical meaning of the 4 C’s of selecting transportation services

1. Competition2. Cost3. Comparison4. Compromise

Sources Destinations

SCM Key Performance Measures

FMFO Deliveries during the month FMFO Adherence % = ---------------------------------------------------------- Total deliveries made during the month.

FMFO= First manufactured first out

Orders Delivered On Time & FullCommitment % ( OTIF ) = ----------------------------------------------------- Orders Received in a month

OTIF= On time in full delivery Transport cost + Labor Cost + storage costSCM COST / TN = --------------------------------------------------------------------- Total sales

• Product Attributes

• Planning

• Request ForQuotation

• Availability• Purchase Order• Order Confirmation

• Call-Off• Order Status• Inventory Status

• ProductQuality

• Usage• InventoryChange

• ProductPerformance

• Delivery Message

• Goods Receipt• Invoice

• Credit/Debit Note• Business Acknowledgement

• Information Request• Complaint• Complaint Request

Plan Make Deliver Source Utility

SCM Process categorized according to the Supply-Chain Council’s, Supply-Chain Operations Reference (SCOR) model

Supply Chain Model Foundation

Bullwhip Effect

Occurs when slight demand variability is magnified as information moves back upstream

Bullwhip Effect

Factors contributing to the Bullwhip Effect:

• Forecast Errors • Lead Time Variability • Batch Ordering • Price Fluctuations • Product Promotions • Inflated Orders

Methods intended to reduce uncertainty, variability, and lead time:

• Vendor Managed Inventory (VMI) • Just In Time replenishment (JIT) • Strategic partnership

Causes of Bullwhip Effect

• Demand Signal Processing (frequent updates of forecasts; only next echelon orders considered)

• Order Batching (to realise logistic Economies of scale + Reducing order processing costs)

• Price Fluctuations (resulting in over-reactions)

• Supply Rationing (Proportionate rationing; unrestricted order acceptance + free return policy)

Counter-Measures for BWE

• Avoid multiple demand forecasts– Order based on ultimate customer

demand– Use EDI+POS+VMI– Choose a good forecasting method (PLC

has a major say)– Move from decentralized DM to

centralized planning (visibility+control is better)

– Remove layers in channel if possible

• Eg: HP, Apple, IBM, P&G/Walmart

Counter-Measures for BWE

• Break order batchesIncrease frequency of ordering (OP costs reduced by EDI)Resort to standardization to minmize OP costsUse 3PL to make small batch replenishments economicalAggregate across retail outlets to utilize FTL EoSReduce safety stocks by cutting lead times

Eg: 3PL using Fedex, P&GStabilize pricesEDLP (P&G)Special purchase contracts

• Eliminate shortage gamingAllocate based on past sales (Sun)Share capacity and information (HP, Motorola)Limit flexibility wrt time (HP, Seagate)

SCM and Information System

Data warehousing:-

• copying of data from various sources, both inside and outside the enterprise, into an environment ready for analytical and informational processing

Electronic Data Interchange

• EDI is the computer-to-computer exchange of business documents between retailers and vendors

• Merchandise sales, Inventory On Hand, Orders• Advanced shipping notices, • Receipt of merchandise, Invoices for payment

Standards:

UCS (Uniform Communication Standard)VICS (Voluntary Inter-industry Commerce Solutions)

Transmission system:

Intranet: local area network (LAN) that employs Internet technologyExtranet: collaborative network that uses Internet technology to link businesses with suppliers, customers, etc.

Electronic Data Interchange

EDI Security

• There are implications of security failures (loss of data, loss of public confidence), but retailers have security policy objectives:

Authentication – system assures person on other end of session is who it claims to be

Authorization - that person has permission to carry out request

Integrity – info arriving is the same that was sent

SAP Business Suite (A SCM software)

Supply Chain Management

● The SAP® SCM application is a part of the SAP® Business Suite. It

functions with a technology platform called SAP® NetWeaver, which enables a company to reduce costs in IT while joining technologies into a single platform. This platform helps companies to process information and data in an organizational leveling order to monitor processes and generate coordination in the supply chain.

Planning with SAP ERP & SCM

SAPECCERP

SAP SCM(includes SAP BW)Core Interface (CIF)

• Demand Planning • Supply Network Planning and optimization• Production Planning with capacity considerations• ATP• CTP• Detailed Scheduling• Deployment• Transportation planning• Vehicle routing and scheduling

• Mater data•Materials•Locations•Partner•Plants•Info records

• Transactional data• Customer orders• Production orders• Purchasing orders

• Execution

Basic Components of SAP SCM

Planning at Supply Chain Level

SAPECC 1

SAPSCM

SAPECC 2

SAPECC n

- Each SAP ECC component covers one or more locations In the network

- Planning may be done centrally

SAP® SCM Functions

Substitute Technologies

Supply Chain Management

ply Chain Management ● Oracle® SCM is an open integrated solution that ensures companies’

efficiency by predicting demand fluctuation, organizing and planning operations on the supply chain, and providing industry-specific solutions. Some of the solutions that this program offers are: Advanced procurement, logistics and transportation management, order fulfillment, manufacturing operations management, product life-cycle management, supply chain planning, and optimization.

Oracle® SCM Benefits

Oracle® SCM Vs. SAP® SCM● Oracle

– Broad enterprise application

– Less services in package

– Certain services not provided

– Less customized

● SAP– Better technology

– More services in package

– More technical support

– More customized

Oracle® SCM Vs. SAP® SCM● Oracle

– Lower cost – Requires less time to

set up– Accommodates more

than 1000 users– Licensing and

updating is free– More user friendly

● SAP– Higher cost– Requires more time

to set up– Accommodates 25

to 1000 users– Licensing and

updating is not free– Less user friendly

Cost Comparison

Thanks to all