An assignment on Supply Chain Practice & Procedure

Presented By: Pankaj Agarwal IIyr M.Tech III Sem Jagannath University, Jaipur

What Is the Supply Chain?

Also referred to as the logistics network

Suppliers, manufacturers, warehouses, distribution

centers and retail outlets facilities

Suppliers

Manufacturers

Warehouses & Distribution Centers

Customers

and the
Raw materials Work-in-process (WIP) inventory

Finished products
Transportation Costs Material Costs Manufacturing Costs Transportation Costs Transportation Inventory Costs Costs

that flow between the facilities

Objective of Supply Chain

Maximize overall value created Supply chain value: difference between what the final

product is worth to the User and the effort the supply chain expends in filling the Users request Value is correlated to supply chain profitability (difference between revenue generated from the User and the overall cost across the supply chain) Sources of supply chain revenue: the User 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

Supply chain illustration

The Supply Chain

Suppliers Manufacturers Warehouses & Distribution Centers Customers

Material Costs

Transportation Costs

Transportation Costs

Manufacturing Costs

Inventory Costs

Transportation Costs

The Supply Chain Another View

Plan
Source Make Deliver Buy

Suppliers

Manufacturers

Warehouses & Distribution Centers

Customers

Material Costs

Transportation Transportation Costs Transportation Costs Manufacturing Costs Inventory Costs Costs

What Is Supply Chain Management (SCM)?

Plan

Source

Make

Deliver

Buy

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 Service level requirements are satisfied

The Importance of Supply Chain Management

Shorter product life cycles of high-technology

products

Less opportunity to accumulate historical data on customer demand Wide choice of competing products makes it difficult to predict demand

The growth of technologies such as the Internet

enable greater collaboration between supply chain trading partners

If you dont do it, your competitor will Major buyers such as Wal-Mart demand a level of supply chain maturity of its suppliers

Availability of SCM technologies on the market Firms have access to multiple products (e.g., SAP, Baan, Oracle, JD Edwards) with which to integrate internal

Definition of SCM
The integration of business processes from end user through original suppliers that provide products, services, and information that add value for customers.

Cont..

Lots of money at stake! Excess Inventory costs Excess freight charges Lost sales / Stock outages Wasted time and energy Extra staff Listings / Delistings User dissatisfaction - privatization Capital costs Real Estate Costs

Supply Chain Model

A closed system view of SCM

R&D Marketing

Suppliers

Finance

Manufacturing
Personnel

Customer Service

Customers

Purchasing

Distribution & Logistics

An Open system view of SCM

Suppliers

Manufacturing
Other Functions

External Customers

OM/SCM
OM View
Closed

Supply Chain View

Open

System Orientation

System Orientation Optimization System Capabilities

Manufacturer Local

Customer Global

Optimization System Capabilities

Technology (hardware, software, multimedia, etc.)

Local Enterprise

Supply Chain stages

SCM Goals
Waste reduction, minimize duplication,

harmonizing operations and systems and enhancing quality. Time compression, compression of order to delivery cycle time. Flexible response, the meeting of customers unique requirements in a cost effective manner. Unit cost reduction, reduce cost per unit to the end user by first determining the level of performance desired by the customer.

SCM Efficiency & Effectiveness Thru

Internet technology.

Supply chain software.

Push vs Pull System

What instigates the movement of the work in the

system?
In Push systems, work release is based on

downstream demand forecasts

Keeps inventory to meet actual demand Acts proactively
e.g. Making generic job application resumes today (e.g.: exempli

gratia)

In Pull systems, work release is based on actual

demand or the actual status of the downstream customers

May cause long delivery lead times Acts reactively
e.g. Making a specific resume for a company after talking to the

Cycle View of Supply Chains

Customer
Customer Order Cycle

Retailer Distributor
Any cycle 0. Customer arrival 1. Customer triggers an order 2. Supplier fulfils the order 3. Customer receives the order

Replenishment Cycle

Manufacturing Cycle

Manufacturer
Procurement Cycle

Supplier

Push/Pull View of Supply Chains

Procurement, Manufacturing and Replenishment cycles
Customer Order Cycle

PUSH PROCESSES

PULL PROCESSES

Customer Order Arrives Push-Pull boundary

Decision Phases
Supply chain strategy or design

Supply chain planning

Supply chain operation

Supply Chain Strategy or Design

Decisions about the structure of the supply chain

and what processes each stage will perform Strategic supply chain decisions

Locations and capacities of facilities Products to be made or stored at various locations Modes of transportation 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 Planning

Definition of a set of policies that govern short-term

operations Fixed by the supply configuration from previous phase Starts with a forecast of demand in the coming year Planning decisions:
Which markets will be supplied from which locations
Planned buildup of inventories Subcontracting, backup locations Inventory policies 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 User 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, place replenishment orders Much less uncertainty (short time horizon)

Drivers of Supply Chain Performance

Facilities places where inventory is stored, assembled, or fabricated production sites and storage sites Inventory raw materials, WIP, finished goods within a supply chain inventory policies Transportation moving inventory from point to point in a supply chain combinations of transportation modes and routes Information data and analysis regarding inventory, transportation, facilities

throughout the supply chain potentially the biggest driver of supply chain performance Sourcing functions a firm performs and functions that are outsourced Pricing Price associated with goods and services provided by a firm to the supply chain

Uncertainty In Supply Chain

Wrong forecasts

Late deliveries
Poor quality Machine breakdowns Canceled orders Erroneous information

Some Solutions.
Vertical integration

Single sourcing
JIT - moving suppliers closer Keiretsu - Japanese concept of partnering a small set of suppliers and vertical integration Information technology improvements- MRP, ERP

Improved inventory control - goods as well as services

Supply Chain Design

Strategic issue Apply quality management principles Control inventory Work with suppliers & Users to achieve goals Major goal of distribution is speed Locate close to major markets Use IT to speed information flow - e.g., EDI, Internet,

etc. Outsource international distribution-(if at all)