Supply Chain Supply Chain - What, Why & How ?

– Intro.

Dr. Suhas Rane

ranesuhas@hotmail.com

Disclaimer : This PPT is prepared from multiple books, papers &

internet down-loading. The credit goes to those authors.
 How does Supply Chain work ?

Let us understand : Retailing Business

Supplier Manufacturer Distributor Retailer Customer

Operation : an Individual Company’s conversion (from Input to Output)

Supply Chain : to join multiple partnering cos. (to fulfil End-Consumer Needs)
Chocolate Business – Supply Chain & Logistics Flow

Fig. from : The Logistics of Supply Chain Management by Edward Frazelle

Supply Chain Management : Definition
(Ref. book : Simchi-Lavi & Kaminsky)

SCM is a network of facilities, integrating Suppliers, Mfg. Centers,

Warehouses, Dist. Centers, Stores & Retail Outlets;
so that the merchandise is produced & distributed at the
right quantities, to right locations, at right time in order to
minimize system-wide cost, while satisfying service level
requirements
 SCM – Definition
(split into Actions Points)

SCM is a NETWORK of FACILITIES –

• Integrating Suppliers, Mfg. Centers, W/H, DCs, Retailers
• where Merchandise is produced & distributed
• in Right quantities → to right locations → at right time
• with the Aim – To minimize system-wide cost,
while satisfying service level requirements
 Flow of Material (and Value) in the Business

In many cos.- a virtual brick wall exists, from Supplier End to Customer End :
• Marketing looks after the end-customer,
• & Purchasing looks after the suppliers.
• Somewhere in middle is a production/ service process.
Since this traditional approach keep all VALUE CREATERS APART,
→ losing the potentials to enhance the customer experience.
Why SCM ? Ref. Article : 50 Co. that failed ….

Global Biz Leaders……. that failed

In order to understand –

the changing Business Environment

& Customer Needs,

let’s understand VALUE Concept

Old Value Equation
Performance
Value =
price

But, Value can be derived by various ways -

1. Conversion value: Value derived from input conversion
2. Use value: Value derived from use
3. Esteemed Value: Value derived from esteem

Now modified Value Eqn. -

Quality + Timeliness + Flexibility + Innovation +……
Value =
price
CHANGING World
New Biz. Model

IBM, HP, Dell

Netflix

Apple, Samsung

Google
D Link

Amazon

Tesla

And …. Think of your company’s Business Model

How to Add Value ?
▪ New Product Design / Modification
▪ Door Delivery
▪ Reduced product cost
▪ Make the product more readily available.
▪ Provide faster service.
▪ Provide customers with relevant info.
▪ Customize the product to specific needs.
▪……………….
▪…………………
Why Supply Chain ?
(or COLLABORATIVE approach )
In modern businesses, the competition –
- has gone beyond 2 rivals
New competition is between their respective Supply Chains.
Thus, You need RIGHT SCM Partners in your business
-Prof. Martin Christopher

Operation : an Individual Company’s conversion

Supply Chain : to join multiple partnering cos.
to fulfil the End-Consumer Needs
Case Studies: Dell v/s HP
Asian Paints
( Read the article : Comp. Adv. thru’ SCM)
 Case : Traditional Supply Chain - modified
Supplier Mfg. Distributor Retailer Customers
HP: Traditional
Channel
Supply Chain

Dell : Direct
Delivery Supply
Chain

Q. : What are the significant points of Dell Supply Chain ?

https://www.youtube.com/watch?v=rBSrbTQhxLY
Dell converted SCM practices into Comp. Edge.
1. Customization : Frt. End → Adequate (but limited) Customization
Back-end → Standard Components
2. SOPs → Uniform Quality Products made from all Global plants.

3. Direct Contact with Customer → Fine segmentation of Customer Needs.

4. No RM / Comp. Inventory → replaced by VMI

ITR is imp. KPI - (Dell :10 DoI, Competitors’ :80-100 DoI).
Dell provide real-time access of Stock figures to his vendors
6. Short Mfg Lead Time → Customer getting quick delivery
+ Latest & new chips (Responsive SC)
7. -- ve Working Cap.

Clearly, Dell’s Supply Chain Design & 3 Flows Mgmt.

play a key role in company’s success.
 SCM Structure
• Managing 3 Flows

• 3 Decision Phases of SCM

• 3 Goals of SCM
- C-2-C Cycle
SCM is → managing the 3 Flows successfully

Supply Chain Management

Suppliers My company Customers

Physical flows (Material)

Information flows
Financial flows
 VALUE Addition Chain

MAT . FLOW
Cash Flow

CUSTOME

CONSUMER
STOCKIST

R
OUT PUT

DEALER
PRODUCT/ SERVICES

STOCKIST
S3

CONSUMER
S2

CUST’ER
DISTRI’OR
S3
S1 SYSTEM

SOLE
SUPPLLIER

IN PUT CONVERSION/ VALUE

CONSUMER
STOCKIST
ADDITION

CUST’R
LAND /CAP/LBR
/EQUI’P/ MAT
/KNOW’GE

Info. Flow

0 VALUE ADDITION CHAIN -4-1-RR 17

3 Decision Phases in Supply chain design –
All the above 3 phases have a strong impact on
overall profitability & success of your business.
 SCM Goals
Value Enhancement

3D

Cost Reduction Cash Release

 CONCEPT OF OPERATING CYCLE TIME

FA Long term Short term

funds funds

Balance

Cash

Debtors
RM

FG
Can this cycle
be shrunk ?
WIP
 Thank You

- Dr. Suhas Rane

SUHAS RANE, RANESUHAS@HOTMAIL.COM, 98210 24029