WHAT IS SUPPLY CHAIN MANAGEMENT?. So can you visualize and appreciate that Competitive Advantage is directly linked to the Efficiency of the Supply chain!!

WHAT IS SUPPLY CHAIN MANAGEMENT?

So can you visualize and appreciate that Competitive Advantage is directly linked to the Efficiency of the Supply chain!! Any drop in efficiency directly adversely affects the cost of the product or the service to the customer.

Supply Chain Management is the management of relationships with suppliers, distributors and customers to deliver superior customer value at less cost by controlling, managing and improving the flow of material and information from suppliers to end users.

WHAT IS SUPPLY CHAIN MANAGEMENT? (SCM)

SCM is not just about transportation. It encompasses study of demand and supply, forecasting, purchasing, follow-up, inspection warehouse management (receipts,, handling, storage, issues, managing inventories), production planning, production, packaging and dispatches, coupled with the related information systems.

WHAT IS SUPPLY CHAIN MANAGEMENT? (SCM)… contd.

SCM is the process of Planning, Implementing and Controlling the efficient and cost-effective flows of raw material, in-process inventory, finished goods and related information from point-of-origin to point of consumption, for the purpose of conforming to customer requirements.


Supply chain is a complex network of relationships that organizations maintain with trading partners to source, manufacture and deliver products.

SCM is the coordination of material, information and financial flows between and among all the participating enterprises.


In other words, SCM is the integration of key business processes from end user through original suppliers that provides products, services and information that add value for customers and other stakeholders.

SCM integrates all the elements of a customer - focused organization i.e., customer analysis, purchasing / supplier partnering, transportation, inventory management, cost benefit analysis, materials management, manufacturing / remanufacturing.

WHAT IS SUPPLY CHAIN MANAGEMENT? (SCM)…contd

Activities in SCM

SCM is the coordination of material, information, and financial flows between and among all the participating enterprises.

Material flows: Involves physical product flows from suppliers to customers through the chain, as well as the reverse flows via product returns, servicing, recycling and disposal.

Information flows: Involves demand forecasts, order transmissions and delivery status reports.

Financial flows: Involves credit card information, credit terms, payment schedules and consignment and title ownership arrangements.


Inter-enterprise integration is a necessary goal of SCM: Since the late 1980s, businesses have focused on reengineering the process within their organization to improve efficiencies.

Many organizations are now looking for other ways to gain competitive advantage.

This includes speeding time to market, reducing distribution costs and getting the right products to the right place at the right time, cost and price.

To achieve these goals, enterprises are rethinking their relationships with suppliers, manufacturers, distributors, retailers, and customers.


SCM include the following functions:

•Supplier management: The goal is to reduce the number of suppliers and get them to become partners in the business relationship. The benefits are reduced Purchase Order processing costs, increased numbers of purchase orders processed by fewer employees and reduced order processing cycle times.

•Inventory management: The goal is to shorten the order-ship-bill cycle. The inventory management solution enables the reduction of inventory levels, improves inventory turns and eliminates out-of-stock occurrences.


Distribution management: The goal is to move documents related to shipping (purchase order, advanced ship notices etc.). Paperwork that typically took days to cycle in the past can now be sent in moments and contain more accurate data, thus allowing improved resource planning.

Channel management: The goal is to quickly disseminate information about changing operational conditions to trading partners. Electronically linking production with their international distributor and reseller networks eliminates thousands of labour in the process.


Payment management: The goal is to link the company and the suppliers and distributors so that payments can be sent and received electronically.

Financial management: The goal is to enable global companies to manage their money in various foreign exchange accounts. Companies must work with financial institutions to boost their ability to deal on a global basis.

Sales force productivity: The goal is to improve the communication and flow of information about the sales, customer and production functions. Linking the sales force with regional and corporate offices establishes greater access to market intelligence and competitor information to improve customer service and service quality.


The Supply Chain can move both ways - upstream and downstream. Systems will vary depending on your perspective as Supplier or Customer.

Upstream: Order sent by Customer through payment received by Supplier.

Downstream: Order received by Supplier through payment sent by Customer.

UPSTREAM AND DOWNSTREAM IN SCM

1. Push-based SCM

2. Pull-based SCM

Push-based SCM: Push-based SCM is also known as the traditional approach to SCM. In this approach, materials and products are flowing from supplier to consumer, via production and distributor units.

Pull-based SCM: Pull-based SCM is also known as the modern approach to SCM. It is known as demand- supply network. In this approach, the actual consumption pulls distribution, which in turn pulls production, in turn pulling material supply.

There are two types of SCM:

Global experience with various companies shows Pull-based SCM is better than Push-based SCM. Experience shows 20-25% improvement in overall working capital, capacity utilization, cost of goods and customer service with ‘Pull-based’ approach, in addition to a 50-100% improvement in time to market and a 3-15% increase in market share.

WHICH APPROACH IS BETTER?

A process is a structured and measured set of activities designed to produce a specific output for a particular customer or market.

To successfully implement SCM, all firms within a supply chain must overcome their own functional SILOS and adapt a Process Approach.

This means, each FIRM in the supply chain is organized around key processes.

1. CRM 5. Manufacturing Flow MGMT

2. CSM 6. Procurement

3. Demand Management 7. Product Development

4. Order Fulfillment 8. Commercialization

SCO SCM

Management Philosophy leads to Implementation of this orientation

SCM SHAPED VISION

SCM as a set of Management Processes

The motive behind the formation of a Supply Chain Arrangement is to increase Channel Competitiveness or Competitive Advantage.

Two Basic Types:

1.Cost Leadership

2.Differentiation (differentiated service)

According to PORTER, Competitive Advantage grows fundamentally out of the Customer Value a firm creates, and it aims to establish a profitable and sustainable position against the forces that determine industry competition.

THE COMPETITIVE ADVANTAGE OF SCM

Thus, implementation of SCM enhances Customer Value and Satisfaction, which in turn, leads to enhanced competitiveness of the Supply Chain, as well as each member of the Supply Chain.

This ultimately improves the profitability of the Supply Chain and its members.

COMMITMENT & TRUST BETWEEN MEMBERS OF THE SUPPLY CHAIN HOLD THE KEY TO COMPETITIVE ADVANTAGE.

AND ORGANIZATIONAL COMPATIBILITY i.e. Complementary Goals & Objectives are pivotal to the success of the supply chain.

THE COMPETITIVE ADVANTAGE OF SCM

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WHAT IS SUPPLY CHAIN MANAGEMENT?. So can you visualize and appreciate that Competitive Advantage is directly linked to the Efficiency of the Supply chain!!