Supply Chain Management-Shruti

7/27/2019 Supply Chain Management-Shruti

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SUPPLY CHAIN MANAGEMENT


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QUESTIONS

How many of you have visited shopping malls?

What is a difference between normal shop and a

mall?

Did you find any difference in cost of the products? What must be the reason for such a discount?

Have you ever visited malls during festival time?

How the ordering procedure they must be following

especially at festival time?


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INTRODUCTION

Supply chain consists of all parties involved,

directly or indirectly, in the procurement of a product

or raw material

Supp ly chain management (SCM) involves the

management of information flows between and

among stages in a supply chain to maximize total

supply chain effectiveness and profitability


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Traditional SCM


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SUPPLY CHAIN

- A typical supply chain may involve many participants. But

some orders may pass through only a few. Not allparticipants will be in all supply chains. It will depend on the

needs of the customer and the roles of the participants

fulfilling these needs.

- A typical Supply chain


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SCM DEFINED

The supply chain is the network of organizations that are

involved through upstream and down stream linkages, in

different processes and activities that produce value in the

form of products and services in the hands of the ultimate

customer.

Supply Chain may be defined as flow of materials

through procurement, manufactur ing, distr ibution,

sales & disposal.


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Dynamics of Material Flow

Supplier Plant Storage Logistics Retailer
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SCM FLOWS

MATERIAL

MONEY

INFORMATION

Procurement Manufacturing Distribution Customer


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SUPPLY CHAIN PLANNINGAND SUPPLY CHAIN

EXECUTION

Payment Flows

Supplier Manufacturer Distributor Retailer Consumer

Information Flows

Supply Chain Execution

Supply Chain Planning


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SUPPLY CHAIN DRIVERS


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FACILITIES DRIVER

Facilityprocesses or transforms inventory into

another product, or it stores the inventory before

shipping it to the next facility

Three primary facilities components

1. Location

2. Capacity

3. Operational design


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FACILITIES 1:

LOCATION

Location efficiencycentralize the location to gain

economies of scale, which increases efficiency

Location effectivenessdecentralize the locations tobe closer to the customers, which increases

effectiveness


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FACILITIES 2:

CAPACITY

Capacity efficiencyminimal excess capacity with

the ability to produce only what is required

Capacity effectivenesslarge amounts of excesscapacity which can handle wide swings in demand


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FACILITIES 3:

OPERATIONAL DESIGN

Operational design efficiencyproduct focus designallows the facility to become highly efficient at producing

one single product, increasing efficiency

Operational design effectivenessfunctional focusdesign allows the facility to perform a specific function on

many different types of products, increasing effectiveness


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FACILITIES DRIVER


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INVENTORY DRIVER

Inventoryoffsets discrepancies betweensupply and demand

I nventory management and control software

provides control and visibility to the statusof individual items maintained in inventory

Two primary inventory components

1. Cycle inventory2. Safety inventory


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INVENTORY DRIVER

Inventoryoffsets discrepancies betweensupply and demand

I nventory management and control software

provides control and visibility to the statusof individual items maintained in inventory

Two primary inventory components

1. Cycle inventory2. Safety inventory


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INVENTORY 1:

CYCLE INVENTORY

Cycle inventorythe average amount of inventory

held to satisfy customer demands between inventory

deliveries

Cycle inventory efficiencyholding small amounts of

inventory and receiving orders weekly or even daily

Cycle inventory effectivenessholding large amounts of

inventory and receiving inventory deliveries only once a

month


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INVENTORY 2:

SAFETY INVENTORY

Safety inventoryextra inventory held in the event

demand exceeds supply

Safety inventory efficiencyholding small amounts of

safety inventory

Safety inventory effectivenessholding large amountsof safety inventory


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INVENTORY DRIVER


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TRANSPORTATION DRIVER

Transportationmoves inventories between the

different stages in the supply chain

Two primary inventory components1. Method of transportation

2. Transportation route


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TRANSPORTATION 1:

METHODOF TRANSPORTATION

Global inventory management systemprovides the ability to

locate, track, and predict the movement of every component or

material anywhere upstream or downstream in the supply chain

Method of transportation efficiency

Method of transportation effectiveness


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TRANSPORTATION 2: TRANSPORTATION

ROUTE

Transportation planning softwaretracks andanalyzes the movement of materials and products toensure the delivery of materials and finished goods atthe right time, the right place, and the lowest cost

Distr ibution management softwarecoordinates theprocess of transporting materials from a manufacturer

to distribution centers to the final customer Transportation route efficiency

Transportation route effectiveness


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TRANSPORTATION DRIVER


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INFORMATION DRIVER

Informationan organization must decide how and

what information it wants to share with its supply

chain partners

Two primary information components

1. Information sharing

2. Push verses pull strategy


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INFORMATION 1:

INFORMATION SHARING

Information sharing efficiencyfreely share

lots of information to increase the speed and

decrease the costs of supply chain processing

Information sharing effectivenessshare

only selected information with certain

individuals, which will decrease the speed and

increase the costs of supply chain processing


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INFORMATION 2:

PUSHVS. PULL INFORMATION STRATEGY

Pull information strategy (efficiency)supply chain partners are responsible for

pulling all relevant information

Pull technologypulls information

Push information strategy effectivenessorganization takes on the responsibility to

push information out to its supply chainpartners

Push technologysends information


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INFORMATION DRIVER


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APPLYING A SUPPLY CHAIN DESIGN

Wal-Marts supply chain management strategy

emphasizes efficiency, but also maintains adequate

levels of effectiveness

Facilities focusEfficiency

Inventory focusEfficiency

Transportation focusEffectiveness

Information focusEfficiency


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APPLYING A SUPPLY CHAIN DESIGN


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FUTURE TRENDS

Fastest growing SCM components

Supply chain event management (SCEM)

Selling chain management

Collaborative engineering

Collaborative demand planning

T S C R


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Increased outsourcing

Large global supply networks

Increased competition

Consumer driven

TODAYS SUPPLY CHAIN REALITY

Lack of visibility reduces suppliers ability to handle variabilitySuppliers use inventory buffers to compensate increasing costsErrors in manual replenishment (filling) processes can cause stock-outsAll of these issues can increase costs, lower customer service and reduce revenue


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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


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1. Share data and information to create visibility

2. Interact to match expectations

3. Synchronize resources and processes to perform as one

Collaboration is Key for Adaptiveness

My CompanyCustomersSuppliers

Outsourcing Partner

Documents

Supply Chain Management-Shruti