1.

2 Introduction to SCM
Definition of SCM

“Supply Chain Management” can be defined as the management of the value

chain consisting of all members associated with moving goods & services from

the raw-material stage to the finished goods stage ready for consumption by

the end customer. The ultimate goal of all members in the supply chain is to

satisfy the demand of the end customer.

Generalized Supply Chain
Members:
• Suppliers (Tier-1, Tier-2 etc.)
• Manufacturers (Original Equipment Manufacturers ‘OEM’)
• Wholesalers/Distributors/ Warehouses
• Transporters
• Carrying & Forwarding agents
• Retailers
• Customers (Tier-1, Tier-2 etc.)

Flows:
• Product Flow (from Supplier’s End to Customer’s End)
• Financial Flow (from Customer’s End to Supplier’s End)
• Information Flow (Bi-directional)

Reverse Logistics
Generalized Supply Chain

T T T T
S OEM D R C

S: Supplier, OEM: Original Equipment Manufacturer, D: Distributor,

R: Retailer, C: Customer, T: Transporter
Key issues in SCM - Responsiveness
• The ability of a Supply Chain to respond/adapt to customer demands
in the shortest possible time.
• Responsiveness and cost efficiency of operations have opposite
natures.
• Hence, it is necessary a firm to decide if its supply chain needs to be
responsive or cost efficient or have a trade-off between the two.
Drivers / Enablers of Supply Chain
• Logistical Drivers:
• Facilities
• Inventory
• Transportation
• Cross-functional Drivers:
• Information
• Sourcing
• Pricing
Facilities
• Location: Urban, Suburban, Rural
• Volume of production, variety of products catered to
• Number: Single location, multi-location
• Function: Production, storage or both
• Cost: Land, Plant & machinery, Employees etc.
Inventory
• Forms:
• Raw Material
• Work in Process Inventory
• Finished Goods
• Packaging Materials
• Spares
• Tools
• Optimal levels
• Costs of Holding, Ordering & Shortage
Transportation
• Modes- Surface (Road, Rail), Water (Sea, Inland), Air, Pipeline,
Ropeway, Multimodal.
• Route optimization
Information
Information regarding:
• Product
• Demand forecasting
• Planning
• Sales
• Costs
• Feedback of customers
Sourcing
• Supplier identification
• Supplier evaluation & selection
• Supplier development
• Negotiation- Discounts, Lead Time of delivery, urgent orders
• Services outsourcing (Eg.: 3PL)
Pricing
• Marketing function – one of the 4Ps of marketing
• Every Day Low Pricing vs High-Low Pricing
• Fixed Price vs Negotiable Pricing
Thank You