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SCM

SCM

SCM Another View

  • - Flow of materials, products & Services

  • - Flow of information

  • - Flow of funds

And

SCM is about integration, effective communication, coordination, speed, cost, quality and flexibility.

SCM

- The APICS dictionary defines the term supply chain as either the “processes from the initial raw materials to the ultimate consumption of the finished product linking across supplier-user

companies,”

  • - Managing Supply & demand, sourcing raw materials & parts, manufacturing, warehousing &

inventory, Order entry & management, Distribution & Delivery to the customer (Supply Chain

Council)

  • - A Supply Chain consists of all stages involved, directly or indirectly in fulfilling a customer request. The supply chain not only includes the manufacturer and supplier, but also

transporters, warehouses & retailers” --- Chopra and Meidl

  • - An integrated process where raw materials are transformed into final products then delivered to customers. (Beamon)

-Supply chain management, then, is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. It represents a conscious effort by the supply chain firms to develop and run supply chains in the most effective & efficient ways possible. Supply chain activities cover everything from product development, sourcing, production, and logistics, as well as the information systems needed to coordinate these activities.

  • - SCM is the integration of key business processes across the supply chain for the purpose of creating value for customers and shareholders.

  • - SCM is a system of people, activities, information and resources involved in creating a product and then moving it to the customer.

  • - Supply chain management (SCM) is the oversight of materials, information, and finances as

they move in a process from supplier to manufacturer to wholesaler to retailer to consumer.

Supply chain management involves coordinating and integrating these flows both within and among companies.

Integration

Integration

SCM

Vendor Manufact Primary Wareho Secondar y Custo Inbound uring Transport using mer Transport Transport
Vendor
Manufact
Primary
Wareho
Secondar y
Custo
Inbound
uring
Transport
using
mer
Transport
Transport
SCM Vendor Manufact Primary Wareho Secondar y Custo Inbound uring Transport using mer Transport Transport

SCM another view

Marketing Excellence
Marketing
Excellence
SCM another view Marketing Excellence Manufacturing Excellence Purchasing Excellence
SCM another view Marketing Excellence Manufacturing Excellence Purchasing Excellence
Manufacturing Excellence
Manufacturing
Excellence
SCM another view Marketing Excellence Manufacturing Excellence Purchasing Excellence
Purchasing Excellence
Purchasing
Excellence

History

Before 1960 Purchasing staff considered as clerks After 1960 these were considered as professionals

They were considered due to material cost went up

After 1970 it became part of Materials Mgt. In 1980, Purchasing & Materials Mgt. became Supply Chain Mgt.

Why SCM?

  • - Inventory cost increasing

  • - Logistic cost increasing

  • - Margins decreasing

  • - Quality become an issue

  • - Manufacturing efficiency

  • - Customer service with value addition

  • - Supplier involvement in New product design & development

  • - Communication

  • - Competition

Under above circumstances in 1990, companies began to work with quality suppliers, involved them in New Product Development, cost saving, quality, processes, delivery,

Business Process Reengineering, Waste elimination & other improvement areas. SCM

rapidly increased in popularity as a source of competitive advantage for firms.

Supply Chain strategy

Maximize customer service, e.g quality, speed, cost etc Minimize Inventory E.g ABC, JIT, VMI etc. Minimize
Maximize
customer
service, e.g quality,
speed, cost etc
Minimize
Inventory
E.g ABC,
JIT, VMI etc.
Minimize
Operating
Costs

Scope

Supplier

Purchasing

Warehouse Inventory Management

Operations

Distribution/ Logistics/Customers Information Technology

Quality

Scope Supplier Purchasing Warehouse Inventory Management Operations Distribution/ Logistics/Customers Information Technology Quality
Scope Supplier Purchasing Warehouse Inventory Management Operations Distribution/ Logistics/Customers Information Technology Quality

Supply Chain Objectives & process

The Right TIME The Right at the QUANTITY
The Right
TIME
The Right
at the
QUANTITY
with The Right the QUALITY
with
The Right
the
QUALITY
The Right PLACE at the
The Right
PLACE
at the
The Right SERVICE
The Right
SERVICE
The Right SUPPLIER with the
The Right
SUPPLIER
with
the
and
and
The Right PRICE paying
The Right
PRICE
paying

Todays Business Scenario

  • - Extremely stiff competition

  • - Increasing awareness exposure due to abundance of information

  • - Lot of choices & options

  • - Cost consciousness ask value for money

  • - More Demanding customer

  • - Changing loyalties & preferences

  • - Mergers / Competition

  • - Pressure for quick response

  • - Energy crises

  • - Law n Order

  • - Bhutta Culture

Today ’ s Business Scenario - Extremely stiff competition - Increasing awareness exposure due to abundance

Objectives

  • - Faster to market with new products & services

  • - Better Customer service

  • - Lower operational costs

  • - Lower inventory costs

  • - Smooth flow of information

  • - Open & honest communication

  • - Waste elimination

  • - Data Accuracy

  • - “We” approach i.e. Team work

Objectives - Faster to market with new products & services - Better Customer service - Lower
Objectives - Faster to market with new products & services - Better Customer service - Lower

Objectives

  • - Developing strong relationships with chain members

Objectives - Developing strong relationships with chain members - Developing high quality products at lower cost
  • - Developing high quality products at lower cost

  • - Sharing experience with external customers

  • - Reducing order cycle time

  • - Minimizing inventory

  • - Maximizing flow

  • - Reducing number of suppliers

  • - Initiating small and big projects of saving

  • - Process re-engineering

  • - Competitive advantage

  • - Customer value & satisfaction

How people are reacting ……

- Sleeping - Observing - Waiting - Preparing - Reacting - Adapting
-
Sleeping
-
Observing
-
Waiting
-
Preparing
-
Reacting
-
Adapting

Old View of the World

Old View of the World • One company does all processing, from raw material through delivery
Old View of the World • One company does all processing, from raw material through delivery
Old View of the World • One company does all processing, from raw material through delivery

One company does all

processing, from raw material through delivery

Supply Network View of the World

Supply Network View of the World • Integrated networks of companies process, produce and distribute products.
Supply Network View of the World • Integrated networks of companies process, produce and distribute products.
Supply Network View of the World • Integrated networks of companies process, produce and distribute products.
Supply Network View of the World • Integrated networks of companies process, produce and distribute products.
Supply Network View of the World • Integrated networks of companies process, produce and distribute products.
Supply Network View of the World • Integrated networks of companies process, produce and distribute products.
Supply Network View of the World • Integrated networks of companies process, produce and distribute products.
Supply Network View of the World • Integrated networks of companies process, produce and distribute products.

Integrated networks of

companies process, produce and distribute products. Every one focuses on its core activity

The Supply Chain Networking

Suppliers

Manufacturers

Warehouses & Distribution Centers

Customers

The Supply Chain Networking Suppliers Manufacturers Warehouses & Distribution Centers Customers Transportation Costs Transportation Costs Transportation

Transportation

The Supply Chain Networking Suppliers Manufacturers Warehouses & Distribution Centers Customers Transportation Costs Transportation Costs Transportation

Costs

Transportation

Costs

The Supply Chain Networking Suppliers Manufacturers Warehouses & Distribution Centers Customers Transportation Costs Transportation Costs Transportation
The Supply Chain Networking Suppliers Manufacturers Warehouses & Distribution Centers Customers Transportation Costs Transportation Costs Transportation
The Supply Chain Networking Suppliers Manufacturers Warehouses & Distribution Centers Customers Transportation Costs Transportation Costs Transportation

Transportation

The Supply Chain Networking Suppliers Manufacturers Warehouses & Distribution Centers Customers Transportation Costs Transportation Costs Transportation
The Supply Chain Networking Suppliers Manufacturers Warehouses & Distribution Centers Customers Transportation Costs Transportation Costs Transportation

Material Costs

Manufacturing Costs

Inventory Costs

Costs

Supply Chain Integration

Internal Integration

Materials Mgt. ----- Manufacturing Mgt. ----- Distribution Mgt.

External Integration

Suppliers ----- Internal supply chain ----- Customers

-
-

Backward (Supplier) & Forward (Customer) Integration

Integration

-The most difficult step

  • - If one activity fails then supply along the chain is disturbed

  • - Participant realization

  • - Team work

  • - One set of numbers

  • - Discipline in forecasting

Integration -The most difficult step - If one activity fails then supply along the chain is
  • - Change in attitude of upper management

  • - Visibility to all

  • - Open communication

Integration

Integration

Integration through Involvement

Tell me and I will forget Show me and I will remember Involve me and I will understand

Integration through Involvement • Tell me and I will forget • Show me and I will

Supply Management’s Impact on Net

Income and the Bottom Line

Supply Management’s Impact on Net Income and the Bottom Line

Best supply chain should result:

LESS
LESS

COST MACHINES EXPENSES MANPOWER REJECTION RESOURCES OVERTIME

SALE PROFIT GROWTH MARKETSHARE RETURNS CUSTOMERS

MORE
MORE

Can we compare?

Improved

Less Improved

EMIRATES

VS

PIA

SONY

VS

LUMINAR

NOKIA

VS

Q Mobiles

TOYOTA

VS

ADAM MOTORS

TCS

VS

PAK. POST

SUI GAS

VS

KESC

AKU

VS

CIVIL

Issues in Supply Chain

-Product Oversell

  • - Product Withdrawal

  • - Product Launch/ Demand increased

  • - Abnormal Demand / Seasonality

  • - Reduced / Cancelled Orders

  • - Changes in Demand/supply Schedule

  • - Discontinuation of material by supplier

  • - Strike / Shut down

Supply Chain Slogans

  • - Either bring change or be beaten by competitors

  • - Cost Reduction

  • - Supplier Partnership/ Agreements

  • - process mappings & redesigning

  • - Reduce lead time

  • - Low inventory level

  • - One set of numbers

  • - Integration with IT

  • - Data Accuracy

  • - Vendor scheduling & performance

  • - CI & Excellence

Supply Chain Slogans - Either bring change or be beaten by competitors - Cost Reduction -
Supply Chain Slogans - Either bring change or be beaten by competitors - Cost Reduction -

Mapping Allows You to

Visualize Your Supply Chain

Mapping Allows You to Visualize Your Supply Chain