SUPPLY CHAIN

MANAGEMENT
CONCEPTS AND APPLICATION
 CONTENTS

• CONCEPT
• GENERIC VIEW
• FLOWS
• OBJECTIVES
• PRODUCT DEVELOPMENT VS SUPPLY CHAIN
• CHALLENGES OF SUPPLY CHAIN
• SUPPLY CHAIN ANALYTICS
• DECISION PHASES
• SUPPLY CHAIN MANAGEMENT
• EVOLUTION OF SCM
• SCM PROCESS
WHAT IS A SUPPLY CHAIN
 SUPPLY CHAIN

MANUFACTRING
INTERNAL
SUPPLIERS SUPPLIERS/CUSTO
MERS

PROCUREMENT MANUFACTURING

FINAL EXTERNAL
CUSTOMERS CUSTOMERS

DISTRIBUTION
WHAT IS A SUPPLY CHAIN

Supply chain stages includes

1. Supplier
2. Manufacturer
3. Wholesaler/ Distributor
4. Retailer
5. Customer
WHAT IS A SUPPLY CHAIN

All Stages involved ,directly or indirectly , in

fulfilling a customer Request,

Includes not only Manufacturers, suppliers ,

but also

Transporters, warehouses, retailers, & even

Customers.
ROLE OF SUPPLY CHAIN

•Integration of Demand
and supply.
WHAT IS A SUPPLY CHAIN

Customer is a very much integral part of supply

chain all the times.

Includes movement of products from suppliers

to manufacturers to distributors,

but also includes movement of information,

funds, and products in both directions .

Probably more accurate to use the term “supply

network”, or “supply web”.
WHAT IS SUPPLY CHAIN

A supply chain is a network of

facilities and distribution options
that performs the functions of
procurement of materials,

transformation of these materials

into intermediate and finished
products,

and the distribution of these

finished products to customers.
WHAT IS A SUPPLY CHAIN

Within each company , the supply

chain includes all functions
involved in fulfilling a customer
request( product development,
marketing, operations,
distribution , finance, customer
service, after sales services
WHAT IS SUPPLY CHAIN

A supply chain is a complex

logistics system that consists of
facilities that convert raw materials
into finished products which later
being distributed to end-consumers.

 Meanwhile, supply chain
management deals with the flow of
goods within the supply chain in the
most efficient manner
 Different types of generic supply chains.

Retailer Customer
Manufacturer Wholesaler

Retailer Customer
Manufacturer

Customer
Manufacturer
FLOWS IN A SUPPLY CHAIN

In the supply chain there are three types of

flow from the supplier to the end customer in
the chain.

1. Product Flow.
2. information flow.
3. Funds flow.
Product flow is nothing but starting from
the raw materials to the end product to
the customer.

Information flow is nothing but the

sharing of information's from the
customer as well as supplier . It is both
directions.

Funds flow is nothing but the funds flow

from the consumers to the manufacturer,
from manufacturer to supplier.
OBJECTIVES OF SUPPLY CHAIN :-

QQTC

1.Right Quality

2.Right Quantity

3.Predetermined Time

4.Pre Established Cost ( Manufacturing cost)

Objectives of SUPPLY CHAIN :-

Getting the

Right goods or services to the

Right place, at the

Right time in the

Desired condition at the

Lowest possible cost with

Highest return on investment

Objectives of supply chain :-

Maximize overall value created .

Supply chain Value:-

Difference between what the final product is worth to

customer and the effort the supply chain expands in
filling the customer's request.

Value is correlated to supply chain profitability

(difference between revenue generated from the
customer and the overall cost across the supply
chain).
 Objectives of supply chain :-
VALUE ADDITION IN SUPPLY CHAIN

Tier Retailer
Tier supplier1
supplier2
Wholesaler

Tier Manufacturer Customer

supplier3

Most value addition due Most value addition

to processing and due to marketing
manufacturing and logistic
activities activities
Objectives of supply chain :-

Sources of supply chain revenue:- The customer

Sources of supply chain cost:- Flows of information,

products, or funds between stages of the supply chain.

Supply chain management is the management of flows

between and among supply chain stages to maximize
total supply chain profitability.
Objectives of supply chain :-

Example:- Micromax receives Rs.

10,000/- from a customer for a mobile
phone( revenue).

Supply chain incurs costs( information,

storage, transportation, components,
assembly, etc.

Difference between Rs, 10,000 and the

sum of all of these costs is the supply
chain profit.

Supply chain profitability is total profit

to be shared across all stages of the
supply chain.

Supply chain success should be

measured by total supply chain
profitability, not profit at an individual
stage.
PRODUCT DEVELOPMENT AND DESIGN is an
important decision for the success of complete
supply chain

With the increasing globalization and easier

access to different kinds of alternative
products in today's markets, the importance of
product design to generating demand is more
significant than ever.

In addition, as supply, and therefore

competition, among companies for the limited
market demand increases and as pricing and
other marketing elements become less
distinguishing factors, product design likewise
plays a different role by providing attractive
features to generate demand.

In this context, demand generation is used to

define how attractive a product design is in
terms of creating demand.
In other words, it is the ability of a product's design to generate
demand by satisfying customer expectations.

But product design affects not only demand generation but also
manufacturing processes, cost, quality, and lead time.

The product design affects the associated supply chain and its
requirements directly, including manufacturing, transportation,
quality, quantity, production schedule, material selection,
production technologies, production policies, regulations, and
laws.

Broadly, the success of the supply chain depends on the product

design and the capabilities of the supply chain, but the reverse is
also true: the success of the product depends on the supply chain
that produces it.

Since the product design dictates multiple requirements on the

supply chain, as mentioned previously, then once a product design
is completed, it drives the structure of the supply chain, limiting
the flexibility of engineers to generate and evaluate different (and
potentially more cost-effective) supply-chain alternatives.
supply chain
issues
Supply chain issues / challenges
Lack of synchronization between planning and execution.

Lack of real time data visibility, with no common view

across all business and channels.

Irregular reviews of safety stock levels, causing frequent

stock- outs or excess inventory.

Lack of flexibility in the network and distribution footprint,

so that decision – makers find it difficult to prioritize between
cost to serve and customer service levels, resulting in less
profitability.

Price volatility.
Supply chain issues/ challenges

 Shrinking PLC
 for example:- Computer, Electronics goods.

 Shrinking time window for delivery.

 Non shrinking lead times.

 Increasing market competition.

 Increasing product variety.

for example:- Apparels, Fashion/ Trendy goods,
appliances.
Supply chain issues / challenges

Seasonal Fluctuations.

Oscillations in demand / BULLWHIP EFFECT

Ineffective Forecasting methods/ data.

Cost of holding inventory vs. cost of stock outs.

Logistic Systems.

Limited visibility to suppliers.

Customer satisfaction

Responsiveness to market changes.

Synchronizing ordering to inventory levels.

Why focus on improving supply chain management

Response time to customer request

Product quality

Time to market for new products

Transportation cost

Selling cost

Inventory Cost

Forecast accuracy

Material ( Raw and finished) holding cost

Correct invoicing

Payment on time
supply chain
analytics
What is supply chain analytics?

The term ‘analytics’ represents the

ability of a system to make data-driven
decisions.

Supply chain analytics aims to improve

operational efficiency and effectiveness
by enabling data driven decisions at
strategic , tactical and operational
levels.

It encompasses virtually the complete

value chain ;- Sourcing, manufacturing,
distribution, and ; logistics.
Supply chain analytics

Supply chain analytics plays a key

role in enhancing the performance of
supply chain by improving supply
chain visibility, managing volatility,
and reducing fluctuations in cost.
 Visibility of supply chain and
logistic process.

Managing demand
volatility, and

Cost fluctuations in supply

chain.
Analytics in supply chain:-

Moving to smarter Logistics to improve supply

chain visibility.

Managing volatility through demand and

inventory management.

Reducing cost fluctuations by optimizing

sourcing and logistics activities.
Supply chain analytics is the
ability to bring data-driven
intelligence to the end-to-end
supply value chain—

Planning, sourcing, manufacturing,

delivering—

reducing inefficiencies and

improving productivity across
processes.
What is supply chain analytics?

Supply chain analytics is the analysis

of data to improve the efficiency and
effectiveness of a company’s supply
chain.

The data used in supply chain

analytics can come from a variety of
sources, including sales data,
production data, inventory data,
logistics data, and customer data.

Supply chain analytics aims to help

companies make better decisions
about their supply chains.

Suppliers can improve their inventory

management, production planning,
logistics, and customer service by
using supply chain analytics.
Supply chain analytics brings efficiency to business
operations through data validation, problem detection,
and benchmarking. Real-time reporting, forecasts, and
optimization,

thereby enhancing

sourcing,
inventory management, and
logistics activities.

This way, all efforts are directed towards taking

customers' products and services to customers faster.

Simply put, supply chain analytics infuses the

capabilities of business intelligence and data analytics
into the supply chain management function,

Hence improving organizational performance and

customer satisfaction.
Why is Supply Chain Analytics Important for
Business?
What kind of data is used for supply chain analytics?

Supply chain analytics makes use of all sorts of data that directly
relates to inbound and outbound logistics  performance.

This data can include anything that relates to supply chain

performance,

such as inventory turnover rate, 

warehouse receiving turnaround times, 
order accuracy rates,
on-time shipments,
and average fulfillment cost. 

Supply chain analytics can also pull insights from external

applications that provide visibility across the entire supply chain,
including third-party performance (suppliers, carriers, and 3PLs),
as well as distribution metrics  related to multiple sales channels
and distribution centers. 
Decision phases
of a
Supply chain
Decision phases of a Supply chain
Successful supply chain management requires
many decisions relating to the flow of
information, product, and funds. These
decisions fall into three categories or phases,
depending on the frequency of each decision
and the time frame over which a decision
phase has an impact. The design, planning,
and operation of a supply chain have a strong
impact on overall profitability and success.

1. Supply chain Strategic or design.

2. Supply chain Tactical or planning.

3. Supply chain operation.

Decision phases of a Supply chain

Supply chain Strategic or design.

 During this phase, the supply chain is structured and

configured.
 It is designed that, how resources will be allocated, and
what processes each stage will perform.

Strategic supply chain decisions:-

1. Locations and capacities of facilities.

2. Products to be made or stored at various locations.
3. Modes of transportation.
4. Information systems.

Supply chain design must support strategic objectives.

Supply chain design decisions are long term and

Expensive to reverse ---

must take into account market uncertainty.

Supply chain Tactical or planning.

 Planning establishes parameters within which

a supply chain will function over a specified
period of time.

 During this phase, the time frame considered is a

quarter to a year. It starts with a forecast of
demand in the coming year. Companies start the
planning phase with a forecast for the coming
year of demand in different markets.

 Companies define a set of operating policies that

govern short-term operations.

 Companies in the planning phase try to

incorporate any flexibility built into the supply
chain in the design phase and exploit it to
optimize performance.
Supply chain Tactical or planning.

Planning Decisions:-

1. Which market will be supplied from which locations.

2. Planned buildup of inventories.

3. Inventory policies .

4. Timing and size of market promotions.

Must consider in planning decisions demand uncertainty,

exchange rates, competition over the time horizon.
Supply chain operation

Time horizon is weekly or daily.

Decisions regarding individual customer orders.

Supply chain configuration is fixed and operating

policies are determined.

Goal is to implement the operating policies as

effectively as possible.

Allocate orders to inventory or production, set order

due dates, generate pick lists at a warehouse,
allocate an order to a particular shipment, set
Delivery schedules,

Much less uncertainty( short time horizon).

The goal of supply chain operations is
to handle incoming customer orders in
the best possible manner. During this
phase, the following activities are
undertaken:

firms allocate inventory or production

to individual orders .

set a date that an order is to be filled.

‚
generate pick lists at a warehouse .
‚
allocate an order to a particular
shipping mode and shipment ‚ .

set delivery schedules of trucks ‚ .

place replenishment orders

SUPPLY CHAIN
MANAGEMENT
As per definition Supply chain management

is the management of a network of all business

processes and activities involving procurement
of raw materials, manufacturing and
distribution management of Finished Goods.

SCM is also called the art of management of

providing the Right Product, At the Right Time,

Right Place and at the Right Cost to the
Customer.
Evolution of Supply chain management

The first Revolution ( Beginning of 20th

century)

----The ford Supply chain

The second Revolution ( around 1960s)

---- The Toyota supply chain

The Third Revolution ( around 1995)

----- The Dell supply chain

SUPPLY CHAIN MANAGEMENT
Why SCM strategy is important for an Organization

Supply Chain Strategies are the critical backbone to Business

Organizations today.

Effective Market coverage, Availability of Products at locations

that hold the key to revenue recognition
depends upon the
effectiveness of Supply Chain Strategy rolled out.

Very simply stated,

when a product is introduced in the market and advertised, the

entire market in the country and all the sales counters need to
have the product where the customer can buy and take delivery. 

Any glitch in the product not being available at the right time can
result in the drop in customer interest and demand which can be
disastrous. Transportation network design and management
assume importance to support sales and marketing strategy.
Inventory control and inventory visibility are two very critical
elements in any operations for these are the cost drivers and
directly impact the bottom lines on the balance sheet.

Inventory means value and is an asset to the company. Every

business has a standard for inventory turnaround that is optimum
for the business.

Inventory turnaround refers to the number of times the inventory is

sold and replaced over a period of twelve months. The health of the
inventory turn relates to the health of business .

In a global scenario, the finished goods inventory is held at many

locations and distribution centers, managed by third parties.

A lot of inventory would also be in the pipeline in transportation,

besides the inventory with distributors and retail stocking points.

Since any loss of inventory anywhere in the supply chain would

result in loss of value,

effective control of inventory and visibility of inventory gains

importance as a key factor of Supply Chain Management function.
SUPPLY CHAIN
MANAGEMENT
PROCESS

OR

COMPONENETS OF
SUPPLY CHAIN
MANAGEMENT
SUPPLY CHAIN MANAGEMENT PROCESS/
COMPONENTS OF SUPPLYCHAIN MANAGEMENT
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 ,

1. Plan
2. Sourcing
3. Manufacturing
4. Deliver
5. Return
Plan

The initial stage of the supply chain process is the planning

stage. We need to develop a plan or strategy in order to
address how the products and services will satisfy the
demands and necessities of the customers.

In this stage, the planning should mainly focus on designing

a strategy that yields maximum profit.

For managing all the resources required for designing

products and providing services, a strategy has to be
designed by the companies. Supply chain management
mainly focuses on planning and developing a set of metrics.
Decide what your firm, and ultimately your supply
chain, will compete on:

low cost or differentiation. 

Low cost supply chains require cutting out

middlemen, limiting transportation needs, and
reducing specialization to save dollars at every stage.
Differentiation may require special relationships with
manufacturers who can respond to specific customer
requests way down the supply chain promptly. 
Divide every supply chain activity into
“in source” or “outsource.” 

Determine what your firm does better than

anyone else, and double down on all
activities that fall under this facet. If your
company creates value in something that
others can’t, in source it. Then, determine if
you can reasonably invest in new core
competencies, or if it will never be profitable
or efficient, and partner up with outsourced
suppliers accordingly.
Develop(Sourcing)

The next stage is procuring raw materials and any

components you aim to outsource.

This must happen at the best possible price, in the

right quantity, at the right time.

It is vital that businesses meticulously screen every

vendor and negotiate all deals to get the best value
without compromising quality.

Delivery scheduling is important, too.

Evaluating vendor performance is a constant need
for optimum supply chain analytics, scheduling
payments, and ensuring export/import requisites are
fulfilled.
we mainly concentrate on building a strong
relationship with suppliers of the raw
materials required for production. This
involves not only identifying dependable
suppliers but also determining different
planning methods for shipping, delivery, and
payment of the product.

Companies need to select suppliers to deliver

the items and services they require to develop
their product.
So in this stage, the supply chain managers need to
construct a set of pricing, delivery and payment
processes with suppliers and also create the
metrics for controlling and improving the
relationships.

Finally, the supply chain managers can combine all

these processes for handling their goods and
services inventory.

This handling comprises receiving and examining

shipments, transferring them to the manufacturing
facilities and authorizing supplier payments
Make OR Manufacturing

The third step in the supply chain management process

is the manufacturing or making of products that were
demanded by the customer.
In this stage, the products are designed, produced,
tested, packaged, and synchronized for delivery.

Here, the task of the supply chain manager is to

schedule all the activities required for manufacturing,
testing, packaging and preparation for delivery. This
stage is considered as the most metric-intensive unit
of the supply chain, where firms can gauge the quality
levels, production output and worker productivity.

.
This is where bundling, assembling, dressing,
or staging happens. Companies need to
optimize this process to ensure minimum
deviation in outcomes and minimize or stave
off non-compliance to customer demands.
Further, the manufacturing process is always
a space for constant improvement, even in the
most cutting-edge automated manufacturing
units.
Deliver

The fourth stage is the delivery stage. Here the

products are delivered to the customer at the
destined location by the supplier. This stage is
basically the logistics phase, where customer orders
are accepted and delivery of the goods is planned.

The delivery stage is often referred as logistics,

where firms collaborate for the receipt of orders
from customers, establish a network of warehouses,
pick carriers to deliver products to customers and
set up an invoicing system to receive payments.

Furthermore, this is also where you consider trial

and warranty periods and billing after the delivery of
the end product.
Return

The last and final stage of supply chain management is

referred as the return .

You will need a straightforward and seamless process for

customers to return a product. For defective products, this
phase includes the company’s set rules for tracking
performance, inventory, and costs for the returned product.

This implies:

Identifying the product condition

Approving returns
Arranging delivery of replacement product
Offering refunds
In the stage, defective or damaged goods are
returned to the supplier by the customer. Here,
the companies need to deal with customer
queries and respond to their complaints etc.
Return stage

often tends to be a problematic section of the

supply chain for many companies.

The planners of supply chain need to discover

a responsive and flexible network for
accepting damaged, defective and extra
products back from their customers and
facilitating the return process for customers
who have issues with delivered products.