Supply Chain Management

Lecture-3 5Aug’23 10.30am-12.30pm.

BITS Pilani Sandeep Kayastha, at Hyderabad.

Pilani Campus
Items of interest

1. Textbook- Ordered/Procured…..started reading?

2. PRLs are now accessible, from eLearn/Taxila.
3. Revised Course Handout is now available, at
MS Teams.
4. Share your feedback after the session, any time,
etc, during the class, at eLearn/MS Teams.

SCM L-03 5Aug’23

Today’s session
Chapter No. Topic Date(s)
1 Understanding the supply chain 22Jul, 29July

MidTerm Test Syllabus

2 Achieving strategic fit in a supply chain 29July
3 Supply chain drivers and metrics 29July, 5Aug
4 Designing distribution networks and applications to Omni-Channel retailing 5Aug

Comprehensive Exam Syllabus

5 Network design in the supply chain
6 Designing global supply chain networks
7 Demand forecasting in a supply chain
10 Coordination in a supply chain
11 Managing Economics of Scale in a Supply Chain: Cycle inventory
12 Managing uncertainty in a supply chain: Safety inventory
14 Transportation in a supply chain
15 Sourcing decisions in a supply chain
16 Pricing and revenue management in a supply chain
17 Sustainability and the Supply Chain
A Information Technology in a Supply Chain Online chapter at www.pearsonhighered.com/Chopra.
Chapters 8, 9, and 13 are not in the syllabus.
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SCM L-03 5Aug’23

 Supply Chain Management
Chapter 3: Supply Chain Drivers and Metrics
BITS Pilani
Pilani Campus
Topics

PRL for this chapter-

Chapter-3: Supply Chain Drivers and Metrics

1. Major drivers of supply chain performance.

2. Role of each driver in the supply chain strategy.
3. Key metrics of each driver.
+
HS Talks

How to log in?

1. Visit https://hstalks.com/
2. Click on “Login”.
3. Click on “Login via Organization”.
4. In the Institution dropdown, choose Birla Institute of
Technology & Science Pilani - WILP and click on
“Proceed to Login Page”.
 If asked, provide your credentials for the elearn/Taxila portal. (Access
to this digital collection is integrated through elearn portal access). 5

SCM L-03 5Aug’23 C-03 Supply Chain Drivers and Metrics

Performance measurement

 Past
 Present
 Future

SCM L-03 5Aug’23 C-03 Supply Chain Drivers and Metrics

 BITS Pilani
Pilani Campus

Major drivers of Supply Chain performance

Six drivers of Supply Chain performance

• Physical locations where the product is stored

Facilities (warehouses), assembled, fabricated (factories), or sold
(retailers).

Inventory • Raw materials, work in process, and finished goods.

Transportation • Moving the goods or inventory from one facility to another .

Logistical

• Data and analysis concerning the facilities, inventory, Cross-functional

Information transportation, costs, prices, and customers.

• Who will perform the activity- production, assembly,

Sourcing storage, sales, etc. (suppliers, warehouse companies,
transport companies, retailers).

Pricing • How much a firm will charge for the goods and services.
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SCM L-03 5Aug’23 C-03 Supply Chain Drivers and Metrics

Structure of Supply Chain drivers

Logistical

Cross-functional

SCM L-03 5Aug’23 C-03 Supply Chain Drivers and Metrics

 BITS Pilani
Pilani Campus

Role of each driver in the supply chain strategy

Trade-off: Responsiveness and Efficiency

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SCM L-03 5Aug’23 C-03 Supply Chain Drivers and Metrics

Little’s law/formula

I=D*T

I - inventory (units)
D - throughput rate (units/week)
T - flow time (weeks) T = 5,000/100 = 50 days
It will take 50 days to empty the
warehouse.

 Inventory and throughput rate (sales rate)

affect flow time (time to empty the tank).

 Little’s formula resembles the formula-

Distance (km) = Speed (km/hr) * Time (hr)

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SCM L-03 5Aug’23 C-03 Supply Chain Drivers and Metrics

 BITS Pilani
Pilani Campus

Key metrics of Supply Chain drivers

Supply Chain Metrics- Consolidated

Facilities Inventory Transportation

Information Sourcing Pricing

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SCM L-03 5Aug’23 C-03 Supply Chain Drivers and Metrics

Facility related metrics

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SCM L-03 5Aug’23 C-03 Supply Chain Drivers and Metrics

Inventory related metrics

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SCM L-03 5Aug’23 C-03 Supply Chain Drivers and Metrics

Transportation related metrics

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SCM L-03 5Aug’23 C-03 Supply Chain Drivers and Metrics

Information related metrics

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SCM L-03 5Aug’23 C-03 Supply Chain Drivers and Metrics

Sourcing related metrics

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SCM L-03 5Aug’23 C-03 Supply Chain Drivers and Metrics

Chapter summary

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SCM L-03 5Aug’23 C-03 Supply Chain Drivers and Metrics

From www

https://www.researchgate.net/publication/325240397_ANALYSIS_OF_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT_AGILITY_IN_CORRUGATED_BOX_INDUSTRY/figures?lo=1

https://www.kinaxis.com/en/blog/best-in-class-supply-chain-from-a-road-warrior-perspective-part-3

https://www.slidegeeks.com/finance/product/ supply-chain-metrics-fleet-
efficiency-loading-time-and-weight-ppt-powerpoint-presentation-portfolio-guidelines

https://www.researchgate.net/publication/342897932_Understanding_industry-level_value_chain_dynamics_management_approaches_for_value_chain_mapping_modelling_and_analysis_-An_exploratory_paper/figures?lo=1
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SCM L-03 5Aug’23 C-03 Supply Chain Drivers and Metrics

SCM Dashboard at www

Softwrae-
 Tableau
 Power BI.

https://www.slidegeeks.com/finance/product/supply-chain-metrics-fleet-efficiency-loading-time-and-weight-ppt-powerpoint-presentation-portfolio-guidelines 22

SCM L-03 5Aug’23 C-03 Supply Chain Drivers and Metrics

 BITS Pilani
Pilani Campus

Pharmaceuticals (API/Formulation) Company

 Supply Chain Drivers
1. Sourcing 2. Facility 3. Inventory
4, Transportation 5. Information

Sourcing Values Facility Values Inventory Values Transportation Values Information Values
Financial Capacity 12Mn/Annum Financial Operational Forecast 5yrs
horizon
Days payable 60 days Average inventory, 500 Cr Average incoming 1.2 Ton/
outstanding Utilisation 43% Rs and outbound 0.72 Ton Frequency of 3 times
shipment size update
Processing/ 5 Hrs Obsolete inventory, 5.O
Average purchase 100 Lakh Rs Lakh
price setup /down/idle Fraction transported Road Forecast 5%
time by mode error
Range of purchase 0.5 – 100 Seasonal 20%
price Lakh Financial
Production 8400 Rs/000’s factors
cost/unit Tablet Average inbound Variance 10%
Operational and outbound 7 Rs/Kg from plan
Average purchase 90Kgs transport cost for a
Quality losses “0” Complaint customer
quantity
Product variety 5 Nos Average inbound 2000 per
Supply quality 100% and outbound shipment.
Supply lead time 45Days Average 1.5 lakh transportation cost Case to
production batch per shipment case basis
Percentage of on- 100% size
time deliveries
Supplier reliability 90% Production 99%
service level

Metrics for month basis. Figures in Lakh

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SCM L-03 5Aug’23 C-03 Supply Chain Drivers and Metrics

 BITS Pilani
Pilani Campus

Dyes and Chemical Company

Supply Chain metrics……….1/2

Dyes and Chemical Company

 The Company has 30+ brands and 1500+ products.
 Dyes and Textile effect (special effect chemicals like water
repellent, wrinkle free, etc) chemicals for Textile industries.

Metric Target July 2018 Aug 2018 Sept 2018

A. Operations Related Metrics
Manufacturing Schedule Adherence 94% 96.1 93.8 97.2
Capacity Utilization > 90% 87 83 91
Quality Rejections (DPPM) < 2500 1750 1270 1610
OTIF (On time in full) > 95 % 98 98 97.1
Avg Customer Complaint Resolution Time < 14 days 12 11 9
B. Financial Metrics

Dead Inventory < 5% of 4.3 4.3 5.2

Inventory
Inventory (Days of Inventory) 99 114 111 102
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SCM L-03 5Aug’23 C-03 Supply Chain Drivers and Metrics

Supply Chain metrics………. 2/2

Metric Target July 2018 Aug 2018 Sept 2018

C. Transportation Related Metrics

Average Truck Load > 8 Tonnes/Truck 10.2 9.1 9.2
Average Loading Time < 200 minutes 182 196 177
Slob (Damage) < 0.15 % of inventory 0.08 0.08 0.12
D. Information Related Metrics
Forecast Accuracy > 78% 72% 76% 76%
Confirmed Plan > 21 days advance 18 26 29
E. Sourcing Related Metrics

Average Lead Time < 60 days 65 68 66

Alternate Supplier 85% Plan Compliance 70 81 86
Qualification
Supplier Quality Index Score > 7 ( on 1 – 10 Rating) 7.1 7.9 7.8

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 BITS Pilani
Pilani Campus

Car manufacturer- Chennai

Supply Chain metrics

Ontime deliveries

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 BITS Pilani
Pilani Campus

Next Chapter-

Chapter 4: Designing Distribution Networks and Applications

to Omni-Channel Retailing
 Supply Chain Management
Chapter 4: Designing Distribution Networks and
Applications to Omni-Channel Retailing
BITS Pilani
Pilani Campus
Topics
PRL for this chapter
1. Role of distribution in the Supply Chain.
2. Factors influencing Distribution Network
Design.
3. Design options for a Distribution Network.
4. E-Business and the Distribution Network. HS Talks for this Chapter-
+ Designing distribution networks and applications to Omni-channel retailing
Toyota’s supplier association: a case studyProf. Peter
Hines – Founder, S A Partners, and Waterford Institute of Technology, Ireland

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SCM L-03 5Aug’23 C-04 Designing Distribution Networks BITS Pilani, Pilani Campus
 BITS Pilani
Pilani Campus

Role of Distribution in the Supply Chain

Distribution in the Supply Chain

 Distribution
Movement and storage of products from the
supplier stage to the customer stage in a supply
chain.

 Distribution affects cost and sales, thus revenues.

 Profit = Revenue - Cost

 Choice of distribution network can achieve supply chain

objectives from low cost to high responsiveness.

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SCM L-03 5Aug’23 C-04 Designing Distribution Networks BITS Pilani, Pilani Campus
 BITS Pilani
Pilani Campus

Factors Influencing Distribution Network Design

Factors influencing Distribution Network Design

Customer service Supply chain costs

 Response time  Facilities and handling
 Product variety  Inventories
 Product availability  Transportation
 Customer experience
 Order visibility
 Returnability  Information

P=R-C

Number of facilities, their functions, and their location and

capacities.

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 BITS Pilani
Pilani Campus

Number of facilities=? Big picture

Remaining chapter will be covered in the next session.

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SCM L-03 5Aug’23 C-04 Designing Distribution Networks BITS Pilani, Pilani Campus