Faculty of Business Administration

Department of Business Administration

Full Module
Specification
Module Title/Course Name Supply Chain & Distribution Management
Module Code : MKT-604
Program : MBA
Academic Year : Fall, 2021
Module Lecturer : AMENA KHATUN
Counseling Hour: Before or after class or by appointment
Module Credit 3
Duration of Module : 4 Months
Grading : As outlined in the University policy
Teaching Methodology Class room lecture, multimedia
presentation, discussion, group study,
assignment, presentation, etc.
Method of Evaluation Attendance =20
Continuous Assessment =20
Mid-term =30
Final =30
TOTAL =100
 Supply Chain & Distribution Management

Introduction

Welcome to Supply Chain & Distribution Management module. This module is

offered to the students of Masters of Business Administration. It is evaluated on the
basis of class tests, assignments, discussions, presentations and the final examination.

Objectives
On completion of this course, you will be able to:
 Heading an operations or logistics department in line with the latest
developments in distribution, consumer and supplier networks, as well as new
methods of managing our network and channel relations.
 Gaining a command of the key factors in new business models based on e-
commerce and an insight into how they affect traditional systems of logistics
management.
 Applying the latest developments in information technology to supply chain
management in order to generate greater added value.

Message from the Teacher:

 Course Contents:
Two Major Contents
Lessons/Week
Lesson-1 Supply chain management
Lesson-2 Objectives and position of supply chain

Class test-1
Lesson-3 Business process integrations (part-1)
Class test-2
Lesson-4 Business process integrations (part-2)
Lesson-5 SCM Phases and benefits

Midterm
Lesson-6 Challenges and strategies

Lesson-7 Drivers of SCM

Class test-3
Lesson-8 Role of marketing in SCM
Class test-4
Lesson-9 Dimensions and principles
Lesson-10 Approach and warehouse process
Lesson-11 Key SCM Concepts
Lesson-12 Porter’s Value Chain
Final

Readings Text:
Supply Chain Management strategy, planning and operation (Sunil Chopra) (3rd edition)
 Supply Chain & Distribution Management: (Lesson –1)

Supply Chain Management

A supply chain is a system of organizations, people, activities, information, and
resources involved in moving a product or service from supplier to customer.

Supply chain Management

 The management of upstream and downstream value-added flows of materials,

final goods, and related information among suppliers, company, resellers, and
final consumers.
 The systematic, strategic coordination of traditional business functions and
tactics across all business functions within a particular company and across
businesses within the supply chain, for the purposes of improving the long-
term performance of the individual companies and the supply chain as a whole.
 A customer-focused definition is given by Hines (2004: p76): "Supply chain
strategies require a total systems view of the links in the chain that work
together efficiently to create customer satisfaction at the end point of delivery
to the consumer. As a consequence, costs must be lowered throughout the
chain by driving out unnecessary expenses, movements, and handling. The
main focus is turned to efficiency and added value, or the end-user's perception
of value. Efficiency must be increased, and bottlenecks removed. The
measurement of performance focuses on total system efficiency and the
equitable monetary reward distribution to those within the supply chain. The
supply chain system must be responsive to customer requirements.
 The integration of key business processes across the supply chain for the
purpose of creating value for customers and stakeholders (Lambert, 2008)
 According to the Council of Supply Chain Management
Professionals (CSCMP), supply chain management encompasses the planning
and management of all activities involved in sourcing, procurement,
conversion, and logistics management. It also includes coordination and
collaboration with channel partners, which may be suppliers, intermediaries,
third-party service providers, or customers.[6] Supply chain management
integrates supply and demand management within and across companies. More
recently, the loosely coupled, self-organizing network of businesses that

cooperate to provide product and service offerings has been called

 the Extended Enterprise.
 A supply chain, as opposed to supply chain management, is a set of
organizations directly linked by one or more upstream and downstream flows
of products, services, finances, or information from a source to a customer.
Supply chain management is the management of such a chain.
 Supply chain management software includes tools or modules used to execute
supply chain transactions, manage supplier relationships, and control
associated business processes.

Supply chain event management (SCEM) considers all possible events and factors that
can disrupt a supply chain. With SCEM, possible scenarios can be created and solutions
devised.

In many cases the supply chain includes the collection of goods after consumer use for
recycling. Including third-party logistics or other gathering agencies as part of the RM
re-patriation process is a way of illustrating the new endgame strategy.

Functions

Supply chain management is a cross-functional approach that includes managing the

movement of raw materials into an organization, certain aspects of the internal
processing of materials into finished goods, and the movement of finished goods out of
the organization and toward the end consumer. As organizations strive to focus on core
competencies and become more flexible, they reduce their ownership of raw materials
sources and distribution channels. These functions are increasingly being outsourced to
other firms that can perform the activities better or more cost effectively. The effect is
to increase the number of organizations involved in satisfying customer demand, while
reducing managerial control of daily logistics operations. Less control and more supply
chain partners lead to the creation of the concept of supply chain management. The
purpose of supply chain management is to improve trust and collaboration among
supply chain partners, thus improving inventory visibility and the velocity of inventory
movement.
Importance
Organizations increasingly find that they must rely on effective supply chains, or
networks, to compete in the global market and networked economy. [16] In Peter
Drucker's (1998) new management paradigms, this concept of business relationships

extends beyond traditional enterprise boundaries and seeks to organize entire business
processes throughout a value chain of multiple companies.
In recent decades, globalization, outsourcing, and information technology have enabled
many organizations, such as Dell and Hewlett Packard, to successfully operate
collaborative supply networks in which each specialized business partner focuses on
only a few key strategic activities (Scott, 1993). This inter-organisational supply
network can be acknowledged as a new form of organisation. However, with the
complicated interactions among the players, the network structure fits neither "market"
nor "hierarchy" categories (Powell, 1990). It is not clear what kind of performance
impacts different supply network structures could have on firms, and little is known
about the coordination conditions and trade-offs that may exist among the players. From
a systems perspective, a complex network structure can be decomposed into individual
component firms (Zhang and Dilts, 2004). Traditionally, companies in a supply network
concentrate on the inputs and outputs of the processes, with little concern for the
internal management working of other individual players. Therefore, the choice of an
internal management control structure is known to impact local firm performance
(Mintzberg, 1979).

In the 21st century, changes in the business environment have contributed to the
development of supply chain networks. First, as an outcome of globalization and the
proliferation of multinational companies, joint ventures, strategic alliances, and business
partnerships, significant success factors were identified, complementing the earlier
"just-in-time", lean manufacturing, and agile manufacturing practices.[17] Second,
technological changes, particularly the dramatic fall in communication costs (a
significant component of transaction costs), have led to changes in coordination among
the members of the supply chain network (Coase, 1998).

Many researchers have recognized supply network structures as a new organisational

form, using terms such as "Keiretsu", "Extended Enterprise", "Virtual Corporation",
"Global Production Network", and "Next Generation Manufacturing System".[18] In
general, such a structure can be defined as "a group of semi-independent organisations,
each with their capabilities, which collaborate in ever-changing constellations to serve
one or more markets in order to achieve some business goal specific to that
collaboration" (Akkermans, 2001).

Supply chain management is also important for organizational learning. Firms with
geographically more extensive supply chains connecting diverse trading cliques tend to
become more innovative and productive.[19]

The security management system for supply chains is described in ISO/IEC 28000 and
ISO/IEC 28001 and related standards published jointly by the ISO and the IEC.Supply
Chain Management draws heavily from the areas of operations management, logistics,
procurement, and information technology, and strives for an integrated approach.

Possible Questions:

Broad and short Questions:

1) Explain the importance of supply chain management.

2) Define supply chain with example.

3) Describe the function of supply chain management

 Supply Chain & Distribution Management: (Lesson –2)

Objectives and position of supply chain

Objectives of Supply Chain Management

The fundamental objective is to "add value".

That brings us to the example of the fish fingers. During the Supply Chain Management
'98 conference in the United Kingdom this fall, a participant in a supply chain
management seminar said that total time from fishing dock through manufacturing,
distribution, and final sale of frozen fish fingers for his European grocery-products
company was 150 days. Manufacturing took a mere 43 minutes. That suggests an
enormous target for supply chain managers. During all that time, company capital is--
almost literally in this case--frozen. What is true for fish fingers is true of most products.
Examine any extended supply chain, and it is likely to be a long one. James Morehouse, a
vice president of consulting firm A.T. Kearney, reports that the total cycle time for corn
flakes, for example, is close to a year and that the cycle times in the pharmaceutical
industry average 465 days. Infact, Morehouse argues that if the supply chain, of what he
calls an "extended enterprise," is encompassing everything from initial supplier to final
customer fulfilment, could be cut to 30 days, that would provide not only more inventory
turns, but fresher product, an ability to customise better, and improved customer
responsiveness. "All that add value," he says. And it provides a clear competitive
advantage.

Supply Chain Management becomes a tool to help accomplish corporate

strategic objectives:

§ reducing working capital,

§ taking assets off the balance sheet,

§ accelerating cash-to-cash cycles,

§ increasing inventory turns, and so on.

Supply Chain Management Today

If we take the view that Supply Chain Management is what Supply Chain
Management people do, then in 1997 Supply Chain Management has a firm hand
on all aspects of physical distribution and materials management. Seventy-five
percent or more of respondents included the following activities as part of their
company's Supply Chain Management department functions:
· Inventory management
· Transportation service procurement
· Materials handling
· Inbound transportation
· Transportation operations management
· Warehousing management

Moreover, the Supply Chain Management department is expected to increase its

range of responsibilities, most often in line with the thinking that sees the order
fulfilment process as one co-ordinated set of activities. Thus the functions most
often cited as planning to formally include in the Supply Chain Management
department are:

· Customer service performance monitoring

· Order processing/customer service
· Supply Chain Management budget forecasting

On the other hand, there are certain functions which some of us might feel
logically belong to Supply Chain Management which companies feel are the
proper domain of other departments. Most difficult to bring under the umbrella of
Supply Chain Management are:

· Third party invoice payment/audit

· Sales forecasting
· Master production planning

Supply Chain Management Tomorrow

The future for Supply Chain Management looks very bright. This year, as well as
 last year, two major trends are benefiting Supply Chain Management operations.
These are

Customer service focus

Information technology

Successful organisations must be excellent in both of these areas, so the

importance of Supply Chain Management and the tools available to do the job
right will continue to expand.

Possible Questions:
Broad and short Questions:
1) Describe the supply chain today.

2) What are the objectives of supply chain? Describe shortly.

3) Explain supply chain tomorrow.

 Supply Chain & Distribution Management: (Lesson –3)

Business process integration

Successful SCM requires a change from managing individual functions to integrating

activities into key supply chain processes. In an example scenario, a purchasing
department places orders as its requirements become known. The marketing department,
responding to customer demand, communicates with several distributors and retailers as
it attempts to determine ways to satisfy this demand. Information shared between supply
chain partners can only be fully leveraged through process integration.

Supply chain business process integration involves collaborative work between buyers
and suppliers, joint product development, common systems, and shared information.
According to Lambert and Cooper (2000), operating an integrated supply chain requires
a continuous information flow. However, in many companies, management has
concluded that optimizing product flows cannot be accomplished without implementing
a process approach. The key supply chain processes stated by Lambert (2004) are:

 Customer relationship management

 Customer service management
 Demand management style
 Order fulfillment
 Manufacturing flow management
 Supplier relationship management
 Product development and commercialization
 Returns management

Much has been written about demand management .Best-in-class companies have
similar characteristics, which include the following:

 Internal and external collaboration

 Initiatives to reduce lead time
 Tighter feedback from customer and market demand
 Customer-level forecasting

One could suggest other critical supply business processes that combine these processes
stated by Lambert, such as:

Customer service management process

Customer relationship management concerns the relationship between an
organization and its customers. Customer service is the source of customer
 information. It also provides the customer with real-time information on
scheduling and product availability through interfaces with the company's
production and distribution operations. Successful organizations use the
following steps to build customer relationships:

 determine mutually satisfying goals for organization and customers

 establish and maintain customer rapport
 induce positive feelings in the organization and the customers
Procurement process
Strategic plans are drawn up with suppliers to support the manufacturing flow
management process and the development of new products. In firms whose
operations extend globally, sourcing may be managed on a global basis. The
desired outcome is a relationship where both parties benefit and a reduction in
the time required for the product's design and development. The purchasing
function may also develop rapid communication systems, such as electronic data
interchange (EDI) and Internet linkage, to convey possible requirements more
rapidly. Activities related to obtaining products and materials from outside
suppliers involve resource planning, supply sourcing, negotiation, order
placement, inbound transportation, storage, handling, and quality assurance,
many of which include the responsibility to coordinate with suppliers on matters
of scheduling, supply continuity (inventory), hedging, and research into new
sources or programs. Procurement has recently been recognized as a core source
of value, driven largely by the increasing trends to outsource products and
services, and the changes in the global ecosystem requiring stronger
relationships between buyers and sellers.[24]
Product development and commercialization
Here, customers and suppliers must be integrated into the product development
process in order to reduce the time to market. As product life cycles shorten, the

appropriate products must be developed and successfully launched with ever-

shorter time schedules in order for firms to remain competitive. According to
Lambert and Cooper (2000), managers of the product development and
commercialization process must:

1. coordinate with customer relationship management to identify customer-

articulated needs;
2. select materials and suppliers in conjunction with procurement; and
3. develop production technology in manufacturing flow to manufacture
 and integrate into the best supply chain flow for the given combination
of product and markets.

Integration of suppliers into the new product development process was

shown to have a major impact on product target cost, quality, delivery, and
market share. Tapping into suppliers as a source of innovation requires an
extensive process characterized by development of technology sharing, but
also involves managing intellectual property issues

Possible Questions:

Broad and short Questions:

1) Describe the customer service management process

2) Explain the customer procurement process.

 Supply Chain & Distribution Management: (Lesson –4)

Business process integration

Manufacturing flow management process

The manufacturing process produces and supplies products to the distribution
channels based on past forecasts. Manufacturing processes must be flexible in
order to respond to market changes and must accommodate mass customization.
Orders are processes operating on a just-in-time (JIT) basis in minimum lot

sizes. Changes in the manufacturing flow process lead to shorter cycle times,
meaning improved responsiveness and efficiency in meeting customer demand.
This process manages activities related to planning, scheduling, and supporting
manufacturing operations, such as work-in-process storage, handling,
transportation, and time phasing of components, inventory at manufacturing
sites, and maximum flexibility in the coordination of geographical and final
assemblies postponement of physical distribution operations.
Physical distribution
This concerns the movement of a finished product or service to customers. In
physical distribution, the customer is the final destination of a marketing
channel, and the availability of the product or service is a vital part of each
channel participant's marketing effort. It is also through the physical distribution
process that the time and space of customer service become an integral part of
marketing. Thus it links a marketing channel with its customers (i.e., it links
manufacturers, wholesalers, and retailers).
Outsourcing/partnerships
This includes not just the outsourcing of the procurement of materials and
components, but also the outsourcing of services that traditionally have been
provided in-house. The logic of this trend is that the company will increasingly
focus on those activities in the value chain in which it has a distinctive
advantage and outsource everything else. This movement has been particularly
evident in logistics, where the provision of transport, storage, and inventory
control is increasingly subcontracted to specialists or logistics partners. Also,
managing and controlling this network of partners and suppliers requires a blend
of central and local involvement: strategic decisions are taken centrally, while
the monitoring and control of supplier performance and day-to-day liaison with
logistics partners are best managed locally.
Performance measurement
Experts found a strong relationship from the largest arcs of supplier and
customer integration to market share and profitability. Taking advantage of
supplier capabilities and emphasizing a long-term supply chain perspective in
customer relationships can both be correlated with a firm's performance. As
logistics competency becomes a critical factor in creating and maintaining
competitive advantage, measuring logistics performance becomes increasingly
important, because the difference between profitable and unprofitable operations

becomes narrower. A.T. Kearney Consultants (1985) noted that firms engaging
in comprehensive performance measurement realized improvements in overall
productivity. According to experts [according to whom?], internal measures are generally
collected and analyzed by the firm, including cost, customer service,
productivity, asset measurement, and quality. External performance is measured
through customer perception measures and "best practice" benchmarking.

Warehousing management
To reduce a company's cost and expenses, warehousing management is
concerned with storage, reducing manpower cost, dispatching authority with on
time delivery, loading & unloading facilities with proper area, inventory
management system etc.

Workflow management
Integrating suppliers and customers tightly into a workflow (or business process)
and thereby achieving an efficient and effective supply chain is a key goal of
workflow management.

Possible Questions:

Broad and short Questions:

1) What is physical distribution? Explain with example.

2) How can company make performance management? Shortly describe.

 Supply Chain & Distribution Management: (Lesson –5)
SCM Phases and benefits

SCM has passed through three phases

Phase 1 : Physical distribution Management – Where manufacturing was handled in

isolation & output was pushed to finished goods warehouse

Phase 2 : Integrated Logistics Management – Operations of sales, procurement,

manufacturing, Warehousing, transportation are integrated to achieve efficient &
effective distribution system

Phase 3 : Logistics management graduated to SCM to include scope to link external

partners like suppliers, distributors, service providers and customers with a view to
deliver enhanced value to customer by synchronized management of flow of physical
goods,information and cash between source to customer

Benefits of SCM:

Inventory reduction

Productivity Improvement

Personnel reduction

Procurement Cost reduction

High customer satisfaction

Increased profit

On-time delivery fulfillment

Revenue/profit increase

Better cash management

Better order management

Logistic cost reduction

Financial close cycle improvement

Broad and short Questions:

1) What are the benefits of SCM? Explain with example.

2) Briefly describe the different phases of SCM.

 Supply Chain & Distribution Management: (Lesson –6)
Challenges and strategies

SCM Challenges:
Values, skill and Training
Uncertainties-Breakdown, political, weather, strike
Matching supply and Demand
Balancing between cost and service level
Shorter product cycles of High Technology products
Managing conflicts
Recent trend of lean, out-sourcing and global sourcing
Variation over time because of seasonality, trends,
Promotions, competitor strategies

SCM Strategy Initiatives

1. Increase efficiency and effectiveness of the function
2. Integrate with manufacturing and engineering
3. Flawless execution of logistics and materials management
4. Relentless focus on risk management and sustainability
5. Building organizational capability and agility via process and technology excellence

1. Efficiency and Effectiveness

Standard policy, processes and metrics • Leverage centers of excellence • Leverage
BPO and KPO shared service centers • Greater focus on core competencies • Leverage
global and regional resources • Leveraged learning • Reduce supplier base

2. Manufacturing and Engineering

Flawless execution of supply chain program management • Total cost of ownership
approach with use of commodity cost models • Value engineering and value analysis •
Earlier involvement in NPD • Design to win, system approach • Supplier innovation

4. Logistics and Materials Management

Standard Materials Management Playbooks aligned to our specific business
model • Cross group optimization of freight, warehouse and DC’s • Exceeding
our customers service and delivery requirements • Full material flow visibility
5. Risk Management
Expand scope of supply chain continuity planning • Global trade management
 compliance • Commodity price management • Supplier contingency planning •
Business continuity management • Doing business right

Broad and short Questions:

1) What are the challenges of SCM? Explain with example.

2) Briefly describe the strategies of SCM.

Supply Chain & Distribution Management: (Lesson –7)

Drivers of SCM
SCM OUTPUTS
Considering the overall objectives of supply chain management of creating value for
customers, and competitive advantage and improved profitability for supply chain firms,
the dimensions of value that may be important to customers, and the mechanisms
whereby competitive advantage and improved profitability can be achieved for supply
chain members, Nix (2000b) concluded: • The objective of SCM is to increase the
competitive advantage of the supply chain as a whole, rather than to increase the
advantage of any single firm. • The means to accomplish competitive advantage is
through creating value for downstream customers greater than that offered by
competitors. • Customer value is created through collaboration and cooperation to
improve efficiency (lower cost) or market effectiveness (added benefits) in ways that
are most valuable to key customers. • Value is not inherent in products or services, but
rather is perceived or experienced by the customer. • In order to compete through
creating customer value, a firm must understand and deliver the value perceived as
important by its customers. • Since the value perceived as important will differ across
customer segments, a firm must identify the customer segments important to its long-

term success and match the capability of the firm to delivering the value important to
those key customers. • Value can be created at many points along the supply chain by
making the customer firm at that point in the chain more effective in serving its
markets, or more efficient and cost-effective in its operations. • Delivering customer
value in dimensions important to customers better than the competition leads to
customer satisfaction and competitive advantage. • By satisfying customers and
achieving competitive advantage, firms in a supply chain influence customer to make
choices and behave in ways that improve the financial performance of the supply chain
and the firms within it. Managerial Conclusion: The degree to which value is created for
customers, and the customer’s perception of the value received relative to that offered
by the competition, are reflected in the customer’s satisfaction with the offering.
Customers who are satisfied with value created in areas important to them are expected
to behave in ways that are beneficial to a firm’s or a supply chain’s success. Purchase
behavior, customer loyalty, and positive communications about products and services
result from customer satisfaction and, at the same time, contribute to a firm’s or supply
chain’s success. In order to achieve these objectives, supply chain managers must work
collaboratively with customers and suppliers to identify and deliver value considered
important by critical downstream customers.

Drivers of SCM Competitive Advantage

 1. Coordinate the traditional business functions across the company and across the
supply chain.
2. Collaborate with supply chain partners on noncore competency functions.
3. Look for supply chain synergies.
4. Not all customers are created equal.
5. Identify and manage the supply chain flow cycles.
6. Manage demand (not just the forecast) in the supply chain.
7. Substitute information for assets.
8. Systems are templates to be laid over processes.
9. Not all products are created equal.
10. Make you easy to do business with.
12. Do not let tactics overshadow strategies.
13. Align your supply chain strategies and your reward

Broad and short Questions:

1) What are the drivers of SCM? Explain with example.

2) Briefly describe SCM output.

 Supply Chain & Distribution Management: (Lesson –8)
Role of marketing in SCM

THE ROLE OF MARKETING IN SCM

Given the role of marketing in the implementation of supply chain management,
suggested by a cause-and-effect relationship between the marketing concept, a market
orientation, relationship marketing, and SCM, Min (2000a) concluded: • The objective
of marketing is creating exchanges, and the output of it is customer satisfaction. • The
marketing concept consists of three pillars: (1) customer focus, (2) coordinated
marketing, and (3) profitability. • The marketing concept is a business philosophy,
guiding a firm toward customer satisfaction at a profit. • A market orientation is the
implementation of that philosophy, forcing the firm to generate, disseminate, and
respond to market information. • The marketing concept not only provides the
philosophical foundation of a market orientation, but also plays an important role in the
management of a firm, interfunctional relationships, and the implementation of SCM. •
A market orientation also affects the management of a firm, interfirm relationships, and
a supply chain. That is, a market orientation leads a firm to focus on market information
generation, dissemination, and responsiveness to satisfy customers, coordinate its
marketing efforts, redefine the responsibilities of each function, restructure its
organizational system, and achieve superior business performance. At the same time, a
market orientation provides an environment that encourages a firm in its efforts to
develop, maintain, and enhance close relationships with other firms, organizational
learning from other firms, and building commitment, trust, and cooperative norms in the
relationships with other firms. • A market orientation is performed both inside and

outside a firm to recognize and respond to customers’ needs, and obtain experiences,
products, skills, technologies, and knowledge from outside the firm that are not
available to other competitors. • A market orientation promotes the implementation of
SCM. • Relationship marketing aims at establishing, maintaining, and enhancing either
dyadic relationships or multiple relationships in a supply chain to create better customer
value. • Relationship marketing helps achieve such objectives of SCM as efficiency
(i.e., cost reduction) and effectiveness (i.e., customer service) through increased
cooperation in close long-term interfirm relationships among the supply chain partners.
• With the help of the marketing concept, a market orientation, and relationship
marketing, SCM achieves competitive advantage for the supply chain and its partners
by reducing costs and investments, and improving customer service.
Broad and short Questions:
1) What are the roles of SCM? Explain with example.
 Supply Chain & Distribution Management: (Lesson –9)
SCM principles and dimensions

Supply-Chain Principles

If supply-chain management has become top management's new "religion," then it

needs a doctrine. Andersen Consulting has stepped forward to provide the needed
guidance, espousing what it calls the "Seven Principles" of supply-chain
management. When consistently and comprehensively followed, the consulting
firm says, these seven principles bring a host of competitive advantages.
1. Segment customers based on service needs. Companies traditionally have
grouped customers by industry, product, or trade channel and then provided the
same level of service to everyone within a segment. Effective supply-chain
management, by contrast, groups customers by distinct service needs--regardless
of industry--and then tailors services to those particular segments.

2. Customise the Supply Chain Management network. In designing their

Supply Chain Management network, companies need to focus intensely on the
service requirements and profitability of the customer segments identified. The

conventional approach of creating a "monolithic" Supply Chain Management

network runs counter to successful supply-chain management.

3. Listen to signals of market demand and plan accordingly. Sales and

operations planning must span the entire chain to detect early warning signals of
changing demand in ordering patterns, customer promotions, and so forth. This
demand-intensive approach leads to more consistent forecasts and optimal
resource allocation.

4. Differentiate product closer to the customer. Companies today no longer can

afford to stockpile inventory to compensate for possible forecasting errors.
Instead, they need to postpone product differentiation in the manufacturing
process closer to actual consumer demand.

5. Strategically manage the sources of supply. By working closely with their

key suppliers to reduce the overall costs of owning materials and services,
supply-chain management leaders enhance margins both for themselves and
their suppliers. Beating multiple suppliers over the head for the lowest price is
 out, Andersen advises. "Gain sharing" is in.
6. Develop a supply-chain-wide technology strategy. As one of the
cornerstones of successful supply-chain management, information technology
must support multiple levels of decision making. It also should afford a clear
view of the flow of products, services, and information.

7. Adopt channel-spanning performance measures. Excellent supply-chain

measurement systems do more than just monitor internal functions. They adopt
measures that apply to every link in the supply chain. Importantly, these
measurement systems embrace both service and financial metrics, such as each
account's true profitability.

The principles are not easy to implement, the Andersen consultants say, because
they run counter to ingrained functionally oriented thinking about how companies
organise, operate, and serve customers. The organisations that do persevere and
build a successful supply chain have proved convincingly that you can please
customers and enjoy growth by doing so.

Five key dimensions of supply chain management

The framework below outlines the five key dimensions of supply chain management
through the implementation procedure that are required to achieve superior
performance. These areas must be addressed iteratively and, generally, in a hierarchical
fashion:

1. Strategy--specifically, the alignment of supply chain strategies with the overall

business direction. Key decision points for managers here include:
· What is required to align the supply chain with the business strategy?

· What level of customer service must we provide to each customer segment to

compete effectively?
· Which channels of distribution best meet our goals and our customers' needs?

2. Infrastructure, which affects cost-service performance and establishes the

boundaries within which the supply chain must operate. Pertinent questions include:
· How must the physical network of plants and distribution be structured?
· Can we rationalise our current network?
 · Can we use contract manufacturing or third-party logistics capabilities?
· What transportation services can best link together the network of facilities?
· Which activities should we outsource?

3. Process--the drive to achieve functional excellence and integration across all major
processes. Managers must ask themselves the following:
· What are the core supply chain processes driving the business?

· How can we adapt best-in-class approaches to our core processes (e.g.,

manufacturing, integrated demand planning, procurement, cycle-time
compression, dynamic deployment)?
· How can we build linkages with our suppliers and customers?

4. Organisation--providing the critical success factors of cohesion, harmony, and

integration across organisation entities. Questions to consider include:

· What level of cross-functional integration is required to manage core processes

effectively?
· How can we leverage cross-company skills and abilities?

· What performance-measurement and reporting structure can help us achieve our

objectives?

5. Technology, which empowers the supply chain to operate on a new level of

performance and is creating clear competitive advantages for those companies able to
harness it. Companies should address the following points:

· Do our IT platform and core applications software support world-class SCM?

· Where will advanced decision-support capabilities have the greatest impact on

business performance?
· What data are required to manage the core business processes outlined above?

· How can we capitalise on advanced communications (e.g., intranets and the

Internet) in managing the supply chain?

· How can we leverage enhanced visibility of customer demand and other key
 parameters?

Broad and short Questions:

1) What are the dimensions of SCM? Explain with example.

2) Briefly describe the principles of SCM .

 Supply Chain & Distribution Management: (Lesson –10)
SCM approach and warehouse process

A Flexible Approach

specialises in the design, development and implementation of solutions to Supply

Chain Management problems.

Consultancy approach is tailored to suit the particular requirements of a client's

project. This ensures the provision of the most appropriate form of assistance,
from a full traditional consultancy assignment, to a placement working within a
client's team.

§ Strategic Analysis
§ Specification

§ Implementation

Strategic Analysis

It's the study of the current and future needs of business and development of such
solutions to meet these requirements. This normally involves the use of computer
models to gain a full understanding of the key issues and to examine the practical
alternatives. A recommendation follows with the most appropriate and cost
effective solution. This approach:
§ gives confidence in the recommended solution.

§ identifies a clear way forward.

§ determines the associated cost and timescales.

§ enables the next stage of the project to be planned.

Specification

In this stage, any recommendations have to include operational detail, enabling

systems, equipment or buildings to be procured to meet the exact requirements of
the solution. This provides:

§ correct logical emphasis on each aspect of the solution.

§ a clear specification of proposals, minimising the risk of unforeseen cost.

§ finalised project cost budgets.

§ competitive equipment procurement.

§ agreed implementation timescales.

Implementation

Refers to responsibility for the tendering of equipment and supplier selection,

contract negotiation and placement.

Contract Management through to completion to ensure that the project is

progressed in accordance with the requirements of time, cost and quality.

Work with the client on preparing any organisational changes and training to
ensure a smooth start to the new operation.

Warehouse processes
warehouse processes should be defined on those principles.

· Total Quality Management requires a review of all processes, provided

equipment and the management of the operation.

· Human performance in picking is and will be unmatched for most products in

most warehouse operations. (however, there are exceptions)

· Design the picking process with care and use automation where it supports
people or helps to eliminate simple but unergonomic tasks.

· Create processes that immediately alert operators about mistakes and don't
carry such mistakes through to a final quality check. Have errors corrected
 immediately. This provides feedback regarding performance not only on
speed, but also on quality.

· Eliminate unnecessary handling steps. Handling product is the costly part in

the warehouse. Do not try to use one warehouse process for all order types
whatever size and service requirements they might have. Segmentation and
integration of processes are keywords.

Broad and short Questions:

1) What are the approaches of SCM? Explain with example.

2) Briefly describe warehouse process.

 Supply Chain & Distribution Management: (Lesson –11)

Key Concepts: At A Glance

JIT:
The just-in-time (JIT) inventory system is a management strategy that aligns raw material orders from suppliers
directly with production schedules. Companies use this inventory strategy to increase efficiency and decrease waste
by receiving goods only as they need them for the production process, which reduces inventory costs. This method
requires producers to forecast demand accurately.

Lead Time:
A lead time is the latency between the initiation and execution of a process. For example, the lead time between the
placement of an order and delivery of a new car from a manufacturer may be anywhere from 2 weeks to 6 months.

Six Sigma:
Six Sigma is a method that provides organizations tools to improve the capability of their business processes. This
increase in performance and decrease in process variation helps lead to defect reduction and improvement in
profits, employee morale, and quality of products or services. Components of Six Sigma are: Recognize, Define,
Measure, Analyze, Improve and Control.

3PL:
Third-party logistics (abbreviated as 3PL, or TPL) in logistics and supply chain management is an organization's
use of third-party businesses to outsource elements of its distribution, warehousing, and fulfillment services.

Lean Manufacturing (Lean Production):

Lean manufacturing is a methodology that focuses on minimizing waste within manufacturing systems while
simultaneously maximizing productivity. Also known as lean production, or just lean, the integrated sociotechnical
approach is based on the Toyota Production System and is still used by that company, as well as myriad others,
including Caterpillar Inc. and Nike. Lean manufacturing is based on a number of specific principles, such as
Kaizen, or continuous improvement.

Push-Pull Manufacturing:
"Push type" means Make to Stock in which the production is not based on actual demand. "Pull type" means Make
To Order in which the production is based on actual demand. In supply chain management, it is important to carry
out processes halfway between push type and pull type or by a combination of push type and pull type.

Global Value Chains (GVCs):

International production, trade and investments are increasingly organized within so-called global value chains
(GVCs) where the different stages of the production process are located across different countries. Globalization
motivates companies to restructure their operations internationally through outsourcing and offshoring of activities.
Firms try to optimize their production processes by locating the various stages across different sites. The past
decades have witnessed a strong trend towards the international dispersion of value chain activities such as design,
production, marketing, distribution, etc. This emergence of GVCs challenges conventional wisdom on how we look
at economic globalization and in particular, the policies that we develop around it.

Kaizen:
Kaizen is a Japanese term meaning "change for the better" or "continuous improvement." It is a Japanese business
philosophy regarding the processes that continuously improve operations and involve all employees. Kaizen sees
improvement in productivity as a gradual and methodical process. The concept of kaizen encompasses a wide range
of ideas. It involves making the work environment more efficient and effective by creating a team atmosphere,
improving everyday procedures, ensuring employee satisfaction, and making a job more fulfilling, less tiring, and
safer.

Total Quality Management (TQM):

Total quality management (TQM) is the continual process of detecting and reducing or eliminating errors in
manufacturing, streamlining supply chain management, improving the customer experience, and ensuring that
employees are up to speed with training. Total quality management aims to hold all parties involved in the
production process accountable for the overall quality of the final product or service. TQM was developed by
William Deming, a management consultant whose work had a great impact on Japanese manufacturing. While
TQM shares much in common with the Six Sigma improvement process, it is not the same as Six Sigma. TQM
focuses on ensuring that internal guidelines and process standards reduce errors, while Six Sigma looks to reduce
defects.

Vertical Integration:
Vertical integration is a strategy where a firm acquires business operations within the same production vertical. It
can be forward or backward in nature. Vertical integration can help companies reduce costs and improve
efficiencies by decreasing transportation expenses and reducing turnaround time, among other advantages.
However, sometimes it is more effective for a company to rely on the established expertise and economies of scale
of other vendors rather than trying to become vertically integrated.
Apple as the Stalwart of Vertical Integration: Apple Inc. is one of the best-known companies for perfecting
the art of vertical integration. The company manufactures its custom A-series chips for its iPhones and iPads. It also
manufactures its custom touch ID fingerprint sensor. Apple opened up a laboratory in Taiwan for developing LCD
and OLED screen technologies in 2015. It also paid $18.2 million for a 70,000-square-foot manufacturing facility
in North San Jose in 2015. These investments allow Apple to move along the supply chain in a backward
integration, giving it flexibility and freedom in its manufacturing capabilities. The company has also integrated
forward as much as backward. The Apple retail model, one where the company's products are almost exclusively
sold at company-owned locations, excluding Best Buy and other carefully selected retailers, allows the business to
control its distribution and sale to the end consumer.
Horizontal Integration:
Horizontal integration is the acquisition of a business operating at the same level of the value chain in a similar or
different industry. This is in contrast to vertical integration, where firms expand into upstream or downstream
activities, which are at different stages of production. Examples of horizontal integration in recent years include
Marriott's 2016 acquisition of Sheraton (hotels) Anheuser-Busch InBev's 2016 acquisition of SABMiller (brewers),
AstraZeneca's 2015 acquisition of ZS Pharma (biotech), Volkswagen’s 2012 acquisition of Porsche (automobiles),
Facebook's 2012 acquisition of Instagram (social media), Disney's 2006 acquisition of Pixar (entertainment media)
and Mittal Steel’s 2006 acquisition of Arcelor (steel).

Efficiency vs Effectiveness:
Efficiency means whatever you produce or perform; it should be done in a perfect way. Although, Effectiveness has
a broader approach, which means the extent to which the actual results have been achieved to fulfill the desired
outcome i.e. doing accurate things.
Efficiency: It refers to the ability to produce maximum output from the given input with the least waste of
time, effort, money, energy and raw materials. It can be measured quantitatively by designing and attaining the
input-output ratios of the company’s resources like funds, energy, material, labor, etc.
Effectiveness: It refers to the extent to which something has been done, to achieve the targeted outcome. It
means the degree of closeness of the achieved objective with the predetermined goal to examine the potency of the
whole entity.

BASIS FOR COMPARISON EFFICIENCY EFFECTIVENESS

MEANING The virtue of being efficient is known The magnitude of nearness of the actual
as efficiency result with the intended result, is known
as effectiveness

WHAT IS IT? Work is to be done in a correct Doing accurate work

manner

EMPHASIS ON Inputs and Outputs Means and Ends

TIME HORIZON Short Run Long Run

APPROACH Introverted Extroverted

ASCERTAINMENT Strategy Implementation Strategy Formulation

ORIENTATION Operations Strategies

Supply Chain & Distribution Management: (Lesson –12)

Porter's Value Chain:
Rather than looking at departments or accounting cost types, Porter's Value Chain focuses on systems,
and how inputs are changed into the outputs purchased by consumers. Using this viewpoint, Porter
described a chain of activities common to all businesses, and he divided them into primary and support
activities, as shown below.

Primary Activities
Primary activities relate directly to the physical creation, sale, maintenance and support of a product or
service. They consist of the following:

 Inbound logistics – These are all the processes related to receiving, storing, and distributing
inputs internally. Your supplier relationships are a key factor in creating value here.
 Operations – These are the transformation activities that change inputs into outputs that are sold
to customers. Here, your operational systems create value.
 Outbound logistics – These activities deliver your product or service to your customer. These are
things like collection, storage, and distribution systems, and they may be internal or external to your
organization.
 Marketing and sales – These are the processes you use to persuade clients to purchase from you
instead of your competitors. The benefits you offer, and how well you communicate them, are sources
of value here.
 Service – These are the activities related to maintaining the value of your product or service to
your customers, once it's been purchased.

Support Activities
These activities support the primary functions above. In our diagram, the dotted lines show that each
support, or secondary, activity can play a role in each primary activity. For example, procurement
supports operations with certain activities, but it also supports marketing and sales with other activities.

 Procurement (purchasing) – This is what the organization does to get the resources it needs to
operate. This includes finding vendors and negotiating best prices.
 Human resource management – This is how well a company recruits, hires, trains, motivates,
rewards, and retains its workers. People are a significant source of value, so businesses can create a
clear advantage with good HR practices.
 Technological development – These activities relate to managing and processing information, as
well as protecting a company's knowledge base. Minimizing information technology costs, staying
current with technological advances, and maintaining technical excellence are sources of value
creation.
 Infrastructure – These are a company's support systems, and the functions that allow it to
maintain daily operations. Accounting, legal, administrative, and general management are examples of
necessary infrastructure that businesses can use to their advantage.

Companies use these primary and support activities as "building blocks" to create a valuable product or
service.