Session I - Introduction Course on Supply Chain Management

8/9/2019 Session I - Introduction Course on Supply Chain Management

1/38

Supply Chain Management

Session I_- Introduction

Definitions.

Value Chain / Supply Chain / Logistics.

Tasks, Roles & Responsibilities.


2/38


Session IIntroduction to Supply Chain

Management


3/38


Session _- IntroductionDefinition

A supply chain is a network of facilities

and distribution options that performs thefunctions of procurement of materials,

transformation of these materials into

intermediate and finished products, andthe distribution of these finished products

to customers.


4/38

The Supply Chain Concept What

is meant by Supply Chain ?

It is a network of linkedorganizations which work

synchronously & harmoniously todeliver value to end customers.

In the future, competition will not

be company vs. company butSupply Chain vs. Supply Chain.


5/38


is meant by Supply Chain ?

The purists define the Supply Chain

as from the ground to the customer.

Thus the Supply Chain is a Business

Process that runs acrossorganizational boundaries as well asfunctional boundaries within the

organization.


6/38

The Supply Chain Concept What is

meant by Supply Chain ?

Within the organization, itencompasses all the steps betweenthe Supplier & the Customer.

Thus it includes traditional functions

such as Purchasing, Planning,Production, Distribution & CustomerService.


7/38

Supply Chain ManagementSession - Introduction

Supply chains exist in both service

and manufacturing organizations,

although the complexity of the chainmay vary greatly from industry to

industry and firm to firm.


8/38

0

Suppliers Consumers

DistributionManufacturingProcurement

Demand & Supply Chain Planning

Information Flow

Product Flow

Inbound Logistics Outbound Logistics

he Supply Chain


9/38

Figure:A typical supply chain network


10/38

The value Supply Chain Concept Whatis meant by value Supply Chain ?

The value Supply Chain is thecombination of material andinformation flow required to source,

make, and deliver goods & services tothe customer.

The key steps

Source

Make

Deliver


11/38

The value Supply Chain Concept Whatis meant by value Supply Chain ?

The supporting steps

Design Plan

Sell


12/38


is meant by Value Chain ?

The key enablers are

Information Technology

Human Resources

Finance


13/38


Evolution

Traditionally, marketing, distribution,

planning, manufacturing, and thepurchasing organizations along the

supply chain operated independently.

These organizations have their own

objectives and these are often conflicting


14/38

Supply Chain Integration and Evolution

The Driving Force

The key drivers for integration are the

problems arising from operating in

functional silos within the organizationand inadequate coordination with

trading partners.


15/38

Supply Chain Integration and

Evolution The Driving Force

- Each function does not control more thana few steps of the process.

- Duplication of activities and competition

between functions.

- Focus on functional goals and objectives.

Supply Chain Integration integrates theMaterial, Information & Financial flows.


16/38


Evolution

Clearly, there is a need for a

mechanism through which thesedifferent functions can be integrated

together. Supply chain managementis a strategy through which such an

integration can be achieved.


17/38


Evolution

Supply chain management typically extends

beyond organizational boundaries acrossdifferent firms in which each channel

member operates independently.

Therefore coordination between the

various players in the chain is key in its

effective management.


18/38


19/38


Evolution - The Stages

There are 4 distinct stages in the

evolution of a supply chain

Stage I Fragmented Pyramid.Below average to average performing

companies in many industries still

operate in Stage I.


20/38



Stage I Fragmented Pyramid.

This stage is characterized by-

-Arms length relationships between

departments, plants, divisions SBUsetc.

- -Adversarial relationships with other

organizations.


21/38



Stage II Integrated Enterprise.

Above average performing companies in

many sectors operate in Stage II.

This stage is characterized by-

- No departmental barriers, focus on

enterprise-wide processes.- Limited commercial cooperation with other

enterprises.


22/38



Stage II Integrated Enterprise.

Current ERP systems &technologies are designed to

enable companies to progress

to and operate in Stage II.


23/38



Stage III Integrated Interprise.

A few excellent companies are operating in

Stage III.This stage is characterized by-

- Extensive commercial, logistical &

electronic cooperation between supplychain partners.


24/38



Stage III Integrated Interprise.

- Extended-ERP(E-ERP / XRP), CRM and

SCM systems & technologies aredesigned to enable companies to progress

to and operate in Stage III.


25/38



Stage IV Virtual Value Network.

Currently, this exists only at a conceptual

level as the business practices, systemsand infrastructure required to enable

Stage IV are at a design / pilot level.

However, leading companies in thesoftware & high tech industries have

begun to exhibit key attributes of operating

in this stage.


26/38



Stage IV Virtual Value Network.

This stage is characterized by an opportunistic

teaming of selected value web members into a

(temporary or permanent) virtual company.Two companies may be each others supplier,

competitor, partner, customer at different points

of time (or even at the same time !), as theychase several opportunities and participate in

several virtual companies.


27/38

Supply Chain Integration The Key

Benefits

The Key benefits to & impact on theorganization are reflected in

improved performance in

- Internal Business Capability.

- Customer & Shareholder Value.

- Competitive Flexibility & Adaptiveness.- Organizational Learning & Knowledge

Management.


28/38

Supply Chain Integration The

Key Benefits

These are in turn reflected in

- Reliable Demand Management.

- High Customer Service Levels.- Reduced Lead Times.

- Optimum Working Capital Costs.

- Optimum Supply Chain Costs.


29/38


30/38


31/38


Supply Chain Decisions

Location Decisions

Production Decisions

Inventory Decisions

Transportation Decisions


32/38



Location Decisions

The geographic placement ofproduction facilities, stocking points,

and souring points (size, number, and

location of these).


33/38



Production Decisions

What products to produce, and whichplants to produce them in, allocation of

suppliers to plants, plants to DC's, and

DC's to customer markets.

The possible paths by which the product

flows through to the final customer

(N

etwork Design).


34/38



Inventory Decisions

Inventories at every stage of the supply chain

raw materials, semi-finished or finished goods.

Deployment strategies (push versus pull),

control policies --- the determination of the

optimal levels of order quantities and reorderpoints, and setting safety stock levels, at each

stocking location


35/38



Transportation Decisions

The mode choice .

Trading-off the cost of using the particular mode

of transport with the indirect cost of inventory

associated with that mode.

Shipment sizes (consolidated bulk shipments

versus Lot-for-Lot), routing and scheduling of

equipment.


36/38

The Supply Chain activities

Broadly. The Chain activities can bebroadly divided into

1) Understanding Supply Chain

Requirements -These include : Marketing& Sales, Customer Service & Order

Fulfillment, Forecasting, Planning &

Scheduling.


37/38

The Supply Chain activities

2) Fulfilling Supply Chain Requirements -These include : Purchasing & Incoming

Logistics.

Manufacturing & Packaging.Distribution & Outbound Logistics.


38/38

The Supply-Side Management and

Demand-Side Management Concept

These are called as the Demand-

Side Management and Supply-

Side Management respectively.

Documents

Session I - Introduction Course on Supply Chain Management