SUPPLY CHAIN MANAGEMENT

& LOGISTICS(SCML)

PRESENTED BY
MANOJ KUMAR ROUT
ASST. PROFESSOR
DEPARTMENT OF OPERATION MANAGEMENT
BIITM, BHUBANESWAR, ODISHA
 MODULE-1
• Supply Chain Foundations:
• Supply Chain as a network of entities,
concept of Value Chain,
• Impact of Supply Chain Management on
Sales, Cost, Profit, Profitability,.
• Impact of Supply Chain Management on Profit
and Loss Account, and Customer Accounts
Profitability
 MODULE-1
 Centralized and Decentralized Supply Chains:
their coordination and aligning business
activities.
 Demand forecasting and management:
Methods,
 Bull whip effect,
 CRM in supply Chain Management.
 References Books
1) Textbook of Logistics and Supply Chain
Management, D K Agrawal, Macmillan
Publishers India Limited.
2) The Supply Chain Revolution: Innovative
Sourcing and Logistics for a Fiercely
Competitive World (Suman Sarkar)
3) Logistics and Supply Chain Management –
by Martin Christopher
 Supply Chain Management
• "A supply chain consists of all parties involved,
directly or indirectly, in fulfilling a customer request.

• Supply Chain Management includes managing supply

and demand, sourcing raw materials and parts,
manufacturing and assembly, warehousing and
inventory tracking, order entry and order
management, distribution across all channels, and
delivery to the customer. (The Supply Chain Council,
U.S.A.)
 Supply Chain Management
• Supply Chain Management deals with the management of
materials, information, and financial flows in a network
consisting of suppliers, manufacturers, distributors and
customers. (Stanford Supply Chain Forum)

• "Supply chain management is the integration of the

activities that procure materials and services, transform
them into intermediate goods and final products, and
deliver them to customers.“
 Supply Chain Management
• Supply chain management (SCM) is the
management of a network of interconnected
businesses involved in the provision of product
and service packages required by the end
customers in a supply chain.
• Supply chain management spans all movement
and storage of raw materials, work-in-process
inventory, and finished goods from point of
origin to point of consumption.
Supply Chain Management
Why Supply Chain Management??
 Reasons of SCM
Supply chain management must address the following
problems:

Distribution Network Configuration: number, location

and network missions of suppliers, production facilities,
distribution centers, warehouses, and customers.
Distribution Strategy: questions of operating control
(centralized, decentralized or shared); delivery scheme,
e.g., direct shipment, pool point shipping, cross docking,
direct store delivery (DSD), closed loop shipping; mode of
transportation,
 Reasons of SCM
Trade-Offs in Logistical Activities: The above
activities must be well coordinated in order to
achieve the lowest total logistics cost. Trade-offs
may increase the total cost if only one of the
activities is optimized.
 Reasons of SCM
Information: Integration of processes through the supply
chain to share valuable information, including demand signals,
forecasts, inventory, transportation, potential collaboration, etc.

Inventory Management: Quantity and location of inventory,

including raw materials, work-in-process (WIP) and finished
goods.

Cash-Flow: Arranging the payment terms and methodologies

for exchanging funds across entities within the supply chain.
 SCM Activities/Functions
1) Managing the movement of raw materials into an organization,
2) Internal processing of materials into finished goods, and the
movement of finished goods out of the organization and toward the
end-consumer.
3) The effect is to increase the number of organizations to satisfying
customer demand,
4) Reducing management control of daily logistics operations.
5) Less control and more supply chain partners led to the creation of
supply chain management concepts.
6) The purpose of supply chain management is to improve trust and
collaboration among supply chain partners,
7) Improving inventory visibility and the velocity of inventory
movement.
 Supply Chain Management – Process:

• Supply chain management is a process used

by companies to ensure that their supply
chain is efficient and cost-effective.
• A supply chain is the collection of steps that a
company takes to transform raw materials into
a final product.
• The five basic components of supply chain
management are discussed below
Supply Chain Management Process
Example of Supply Chain Management
Example of Supply Chain Management
Example of Flipkart SCM
Supply Chain Management – Process Flow:

• Supply chain management can be defined as a

systematic flow of materials, goods, and related
information among suppliers, companies,
retailers, and consumers. There are three
different types of flow in supply chain
management:
Material flow
Information/Data flow
 Money flow
 Supply chain as a Network of Entities
• A supply chain is a network between a company and
its suppliers to produce and distribute a specific
product to the final buyer.
• This network includes different activities, people,
entities, information, and resources.
• The supply chain also represents the steps it takes to
get the product or service from their original state to
the customer. 
• The entities in the supply chain include PRODUCTS;
FACILITIES; VEHICLES; ROUTES.
Supply chain as a Network of Entities
 Role and Interactions between the Entities

• Product:
• What products does the market want?
• How much of which products should be
produced and by when?
• This activity includes the creation of master
production schedules that take into account
plant capacities, workload balancing, quality
control, and equipment maintenance.
• Facility:
• What inventory should be stocked at each stage in a
supply chain?
• How much inventory should be held as raw
materials, semi-finished, or finished goods?
• The primary purpose of inventory is to act as a buffer
against uncertainty in the supply chain. However,
holding inventory can be expensive, so what are the
optimal inventory levels and reorder points?
• Vehicle:
• How should inventory be moved from one supply chain
location to another?
• Air freight and truck delivery are generally fast and reliable
but they are expensive.
• Shipping by sea or rail is much less expensive but usually
involves longer transit times and more uncertainty.
• This uncertainty must be compensated for by stocking higher
levels of inventory. When is it better to use which mode of
transportation?
•  
• Routes:
• Where should facilities for production and
inventory storage be located?
• Where are the most cost efficient locations for
production and for storage of inventory?
• Should existing facilities be used or new ones
built? Once these decisions are made they
determine the possible paths available for product
to flow through for delivery to the final consumer.
 Value Chain Focus of Supply Chain:
• Supply Chain refers to the integration of all activities involved in the process of
sourcing, procurement, conversion and logistics.

• On the other hand, value chain implies the series of business operations in which
utility is added to the goods and services offered by the firm so as to enhance
customer value.

• Supply Chain is the interconnection of all the functions that starts from the
manufacturing of raw material into the finished product and ends when the product
reaches the final customer.

• Value Chain, on the other hand, is a set of activities that focuses on creating or adding
value to the product.

• These two networks help to provide quality products to the customer at a reasonable
price. Most of the time supply chain is juxtaposed with the value chain.
 ZARA
• Zara needs just one week to develop a new product and get it to stores, compared to the
six-month industry average, and launches around 12,000 new designs each year.

•  Zara has a policy of zero advertising.

• Zara set up its own factory in La Coruña (a city known for its textile industry) in 1980,
This approach, designed by Toyota Motor Corp., it was called the just-in-time (JIT)
system. 

• Zara became the biggest retailer in the world to raise awareness for the Detox Campaign,
and switched to a fully toxic-free production.

• The clothing is delivered within 48 hours. Zara produces over 450 million items per year.

• There are over 7000 Zara stores in 50 countries located across 96 markets.
 ZARA Expansion
• In 1988, the company started its international expansion
through Porto, Portugal. In 1989, it entered the United States, and
then France in 1990.

•  During the 1990s, Zara expanded to Mexico (1992), Greece,

Belgium and Sweden (1993).

• In the early 2000s, Zara opened its first stores in Japan and
Singapore (2002), Russia and Malaysia
(2003), China, Morocco, Estonia, Hungary and Romania
(2004), the Philippines, Costa Rica and Indonesia (2005), South
Korea (2008),India (2010), and South Africa and Australia (2011).
 ZARA
• On September 2010, Zara launched its online
boutique. The website began in Spain, the UK,
Portugal, Italy, Germany and France.
• Zara introduced the use of RFID technology in
its stores in 2014.
 Supply Chain Management–Advantages:

• Develops better customer relationship and service.

• Creates better delivery mechanisms for products and services in demand with
minimum delay.
• Improvises productivity and business functions.
• Minimizes warehouse and transportation costs.
• Minimizes direct and indirect costs.
• Assists in achieving shipping of right products to the right place at the right time.
• Enhances inventory management, supporting the successful execution of just-in-
time stock models.
• Assists companies in adapting to the challenges of globalization, economic
upheaval, expanding consumer expectations, and related differences.
• Assists companies in minimizing waste, driving out costs, and achieving
efficiencies throughout the supply chain process.
Job responsibilities for a Supply Chain Manager include:

• Overseeing and managing overall supply chain and

logistics operations, to maximize efficiency and minimize
cost.
• Collaborating with multiple-functional managers to
• plan and execute the development of a
• distribution center operational process to
• enable seamless transfers.
• Managing and monitoring vendors' qualifications and
performances to ensure they meet the company's
requirements.
 Case study for Assignment
•  Starbucks
• Starbucks is pretty much a household name, but like many of the
most successful worldwide brands, the coffee-shop giant has been
through its periods of supply chain pain. In fact, during 2007 and
2008, Starbucks leadership began to have severe doubts about the
company’s ability to supply its 16,700 outlets. As in most
commercial sectors at that time, sales were falling. At the same
time, though, supply chain costs rose by more than $75 million.

• What are the Supply Chain Cost Reduction Challenges ??

• Describes The Path to Cost Reduction.