" Is the strategic management of activities involved in
the acquisition and conversion of materials to finished products delivered to the customer" Supplier Management Schedule / Resources Conversion Stock Deployment Delivery Customer Management Leads to Business Process Integration Material Flow Information Flow
Supply chain is the system by which organizations source, make and deliver their products or services according to market demand. Supply chain management operations and decisions are ultimately triggered by demand signals at the ultimate consumer level. Supply chain as defined by experienced practitioners extends from suppliers suppliers to customers customers.
SUPPLY CHAIN INCLUDES :
MATERIAL FLOWS
INFORMATION FLOWS
FINANCIAL FLOWS
SUPPLY CHAIN MANAGEMENT IS FACILITATED BY :
PROCESSES
STRUCTURE
TECHNOLOGY
Supply chain serves two functions:
Physical
Market mediation
Supply chain objectives may differ from situation to situation. For functional products, cost efficiency is the critical factor. For innovative products, responsiveness is the important factor. Leanness + Agility together make up Leagility Supply Chain Structure Information Flow Raw Materials RETAILER FACTORY DC RDC
SUPPLIER Finished Goods SUPPLY CHAIN DRIVERS
Not new. Value system of Michael Porter Why sudden interest? Demanding customers Shrinking product life cycles Proliferating product offerings Growing retailer power in some cases Emergence of specialized logistics providers Globalization Information technology SUPPLY CHAIN ELEMENTS Supply Chain Design Resource Acquisition Long Term Planning (1 Year ++) Strategic Production/ Distribution Planning Resource Allocation Medium Term Planning (Qtrly,Monthly) Tactical Shipment Scheduling Resource Scheduling Short Term Planning (Weekly,Daily) Operational Supply Chain Goals
Efficient supply chain management must result in tangible business improvements. It is characterized by a sharp focus on Revenue growth Better asset utilization Cost reduction. Reduce Overall Cycle Time : Improve Response Supply Chain Management Underlying Principles Compression Conformance Co-operation Communication (Planning/Manufacturing/Supply) (Forecasts/Plans/Distribution) (Cross -Functional) (Real Time Data) . The steps involved
Step1- Designing the supply chain Determine the supply chain network Identify the levels of service required Step 2 - Optimizing the supply chain Determine pathways from suppliers to the end customer Customer markets to Distribution centers Distribution centers to production plants Raw material sources to production plants Identify constraints at vendors, plants and distribution centers Get the big picture Plan the procurement, production and distribution of product groups rather than individual products in large time periods- quarters or years Step 3- Material flow planning
Determine the exact flow and timing of materials Arrive at decisions by working back from the projected demand through the supply chain to the raw material resources Techniques ERP Step 4 - Transaction processing and short term scheduling
Customer orders arrive at random This is a day to day accounting system which tracks and schedules every order to meet customer demand Order entry, order fulfillment and physical replenishment Information flows in Supply Chain Management
Information is overriding element Need for databases Master files: Information about customers, products, materials, suppliers, transportation, production and distribution data- do not require frequent processing Status files- heart of transaction processing- track orders and infrastructure status- updated daily. Essentially using the same information to make all plans right from structuring the network to processing every day supply chain tasks. Issues in customer management
Penetration vs Spread Concentration is necessary to commit the necessary resources for true customer integration Depth of customer contact R&D - sharing information vs developing new products together Logistics - Pros and cons of methods of transportation vs reengineering the logistics process Implementation: Points to keep in mind
Recognize the difficulty of change. Prepare a blueprint for change that maps linkages among initiatives. Assess the entire supply chain from supplier relationships to internal operations to the market place, including customers, competitors and industry as a whole. Thank You