08-Nov-15

Supply Chain Management

Session 1 : Part 1

What is Supply Chain ?..

Supply Chain is a network of facilities and distribution

options, that perform the function of :
Procurement of raw materials
Transformation of these raw materials into
intermediate and finished products and
The distribution of these finished products to the
customers.

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08-Nov-15

What Is Supply Chain Management?

Supply chain management is a set of approaches
- utilized to efficiently integrate suppliers,
manufacturers, warehouses, and stores,
- so that merchandise is produced and distributed at the
right quantities, to the right locations, and at the right
time,

What is Supply Chain Management ?..

Supply chain management encompasses the planning and
management of all activities involved in sourcing and
procurement, conversion, and all logistics management
activities.
Importantly, it also includes coordination and collaboration
with channel partners, which can be suppliers, intermediaries,
third party service providers, and customers.
In essence, supply chain management integrates supply and
demand management within and across companies.

- in order to minimize system wide costs while satisfying

service level requirements.

Two Other Formal Definitions

The design and management of seamless, value-added
process across organizational boundaries to meet the
real needs of the end customer
Institute for Supply Management
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

Upstream Supply Chain- The upstream portion of the supply

chain includes the organization's suppliers and the processes
for managing relationships with them.
Downstream Supply Chain- The downstream portion consists
of the organizations and processes for distributing and
delivering products to the final customers.
The business value of supply chain management systems
includes:
Streamlined supply chain and accurate information
Reduced supply chain costs
Increased sales through accurate product availability

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08-Nov-15

Concept of Supply Chain Management ...

NIKES SUPPLY CHAIN

A set of approaches used to efficiently integrate

Suppliers
Manufacturers
Warehouses
Distribution centers
So that the product is produced and distributed
In the right quantities
To the right locations
And at the right time
System-wide costs are minimized and
Service level requirements are satisfied

The Supply Chain

Suppliers

Manufacturers

Logistics Definition

Warehouses &
Distribution Centers

Customers

Philip Kotler defines logistics as

planning, implementing, and controlling
the physical flows of materials and finished
goods from point of origin to point of use
to meet the customers need at a profit.
"Logistics means having the right thing, at
the right place, at the right time."

Transportation
Costs
Material Costs

Transportation
Costs

Manufacturing Costs

Inventory Costs

Transportation
Costs

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08-Nov-15

Logistics Management

Logistical Management

Logistics management
- is that part of the supply chain management
process
- that plans, implements and controls the efficient,
effective forward ;
- and reverse flow and storage of goods, services
and related information
- between the point of origin and the point of
consumption in order to meet customers
requirements.

Logistical management includes

- the design and administration of systems
- to control the flow of materials, WIP and finished
inventory
- to support business unit strategy.

Logistics Mgt Vs SCM

Logistics Mgt

Logistics Mgt Vs SCM

SCM involves collaboration,

partnering, and co-ordination across
entities serving the nodal
organization.

Supply chain management (SCM)

encompasses the planning and
management of all activities involved
in sourcing and procurement,
conversion and all logistics
management activities.

Logistics focuses on order mgt,

inbound transportation, in-plant
management, outbound
transportation, storage and
procurement.

Logistics is especially a framework

that creates a single plan for the flow
of products and information through
a business

Supply Chain builds upon this

framework and seeks to achieve
linkage and coordination between
processes of other entities in the
pipeline i.e. suppliers and customers
and the organization itself.

SCM is more outward looking and

inter-organizational in approach.

Logistics takes care of the demand

side.

Supply Chain involves supply and

demand side.

SCM

Logistics management is that part of

supply chain management that plans,
implements, and controls the
efficient, effective forward and
reverse flow and storage of goods,
services and related information
between the point of origin and the
point of consumption in order to
meet customers requirements.

Logistics is more on internal

organization. Primarily, it is inwardlooking

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08-Nov-15

Logistics sevice to Customers..

Objectives of logistics:
1. Reduction of inventory - maintaining inventory
at the lowest level

2. Economy of freight - route planning, long

distance shipments

3. Reliability and consistency in delivery

performance - delivered on time
4. Minimum damage to products improper
packing,frequent handling of consignment

5. Quicker and faster response latest

information and communication technology

Components of Logistic Management

Right Product in the

Right Quantity from the
Right Source to the
Right Destination in the
Right Condition at the
Right Time with the
Right Documentation for the
Right Cost

List of Logistic Elements for a Firm

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08-Nov-15

Logistics is the process of movement of materials and

products into, through and out of firm.

Business Logistics in a Firm

Inbound logistics + Materials Management +

Physical Distribution = Logistics

Inbound logistics the receiving and warehousing of raw

materials, and their distribution to manufacturing as they
are required.
Outbound logistics the warehousing and distribution of
finished goods.

Objectives of Good Supply Chain

Profitability
Reliability
Flexibility
Responsiveness
Turnover rate
Communication & Coordination

Success Stories in Various Industries

In the field of retailing, Wal-Mart, the largest
company on the Fortune 500, has elevated supply
chain management to a strategic imperative-a tactic
responsible for much of the company's success. By
carefully managing its suppliers and distribution
practices, it has been able to reduce its costs and
offer its customers products at prices far below those
of any other retailer.

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08-Nov-15

Success Stories in Various Industries

In the manufacturing industry, Dell has become the
largest computer maker in the world based on the
simple conceit of eliminating retailers and
distributors; in doing so, Dell reduced inventory costs
on highly obsolescent products..

Industries which require SCM

Manufacturing Industry
Retail Industry
Food & Beverage Industry
Healthcare Industry
Transportation & Logistics Industry

Success Stories in Various Industries

Transportation and logistics companies themselves
revolutionized the way people do business.
DHL, for instance, recognized that processing of
international customs papers in foreign ports would
often hold up shipments for weeks. It solved this
problem by flying customs papers ahead of
shipments for processing, so that the paperwork
would already be completed by the time a ship
arrived at port, allowing it to be unloaded
immediately.

Excellence in SCM is achieved through :

Proper information use

Proper product movement
Proper relationship management

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08-Nov-15

Supply chain management flows

Material and information flow

Material flow

Information flow

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