Framework for SCM

Supply chain
Business
processes

Supply chain Supply chain

management network
components structure
A. Supply chain network structure
It is a network of channel members & the link between the members of the supply
chain.
Channel Structure
- Developed by Bucklin
- Based on assumption that the purpose of the channel is to provide consumers with a
desired combination of outputs at minimal cost.
- Channel structure is affected by technological, cultural, physical, social, &
behavioral variables & local, state, & federal laws.
3 Primary decisions influence the network structure of the company
1 Identifying the members of the supply chain:-

Primary Members:- The units who perform operational and/or managerial activities
in the business process designed to produce a specific output for a particular
customer or market.
Secondary or supporting Members:- Companies that provide resources,
knowledge, utilities, or assets for the primary members of a supply chain.
Retailers tend to identify the critical members on the basis of the contributions made
to various flows of product, title, payment, information, & promotion & allocate
managerial attention & resources accordingly.
2. Determination the structural dimension of the network:-
The supply chain can take three structural dimension
1. Vertical structure:- refers to the numbers of tier in the supply chain it
can be long with numerous tiers or short with few tiers
2. Horizontal structure:- refers to the number of suppliers/customers
represented within each tier.
3. Retailers' position from the source of supply:- the retailer can
position itself at or near the initial source of supply
3. Managing the process links:-
4 fundamentally different type of business process links identified between members of
a supply chain
1. Managed process links:- Links that retailers find important to integrate & manage
2. Monitored process links:- Are not as critical to the retailer, but it is important that
the process links are integrated & managed appropriately between the concerned
members of the chain.
3. Non-managed process links:- Are links in which the retailer are not actively
involved, nor are they critical enough to use resources for monitoring.
4. Non-member process links:- Links between members & non-members of the
supply chain.
B. Supply Chain Processes
It can be viewed as a network of activities designed with a focus on customers &
with a purpose of dynamic management of flows of products, information, cash,
knowledge, and ideas in the chain
It aims at achieving trade-offs within & among members regarding inventory&
activity allocation.
An integrated supply chain requires continuous sharing of information so as to
create the most optimum product flows
1. Efficient Consumer Response:-
- It is a process for providing consumers with the best possible value, service, &
variety.
A . Efficient product replenishment:- it is smooth, continual flow of product, matched
to consumption & supported by a timely, accurate, & preferably, paperless information
flow.
B. Category management:- to optimize the range of products stocked in store, the
efficiency of promotion, & new product introductions.
C. Customer service management:- it provide a single source of information. It is a
point of contact that efficiently handles inquiries with regard to shipping date, product
& pricing information, product availability, & sales after service.
D. Customer order fulfillment:- this requires integration of the distribution &
transportation plans.
2. Buying & merchandising:-

Buying involves development of plans with suppliers to support the product flow
management process as also development of new products.
Long-term partnerships are developed with a small core group of suppliers that
allows for quick response & continuous improvement.
The merchandising function involves determining the specific products/brands to
offer & their sourcing.
The merchandising strategy begins with studying customer preference in terms of
product range, variety for choice in a given product, freshness, availability, & other
factors that are important to the customer.
3.Product Development & Private Labels
As part of a strategy for ECR , many retailers get directly involved in developing
products suitable for their customer segment.
Retailers are required to integrate their customers & suppliers into the product
development process so that they can minimize the new product development
process & successfully launch new products/categories in the minimum possible
time & remain competitive.
Private Label brand also called own label or store brand :- A product line that is
owned, controlled, merchandised, & sold by a specific retailer, in its own stores.
Private label have evolved mainly due to the need of retailers to differentiate
themselves from similar format retailers & cope with the neighborhood kirana store.
It also help improve gross margins & retain footfalls
Private labels have a large share in paper products, plastic bags& wraps (29%),
food categories- refrigerated food (28%). Personal care product (4%), cosmetics
(2%), baby food (1%) have fewer private label.
Reasons for retailers growing interest in their own brand sales:-
1. Private label are priced 20 to 30 % lower than manufacture brands. They offer
quality, style, & consistency.
2. The exclusively of strong private labels boosts store loyalty & create a relationship
based on the experience of the product, & not just the shopping experience.
3. Retailers have more control over distribution, display, promotion, & quality of
merchandise in case of private labels.
4. It is easier for the retailer to manage the inventory in terms of volume &
segmentation.
Disadvantages of Private Label
1. The retailer needs to make significant investments to design merchandise, create
customer awareness, & develop a favorable image for its private label brands.
2. The sales staff may need additional training to help them sell private label
brands.
3. Customers who are loyal to manufacturers brands would shop at other stores
when the preferred brands are not stocked or when the full variety is
unavailable.
3. Supply Chain Management Components
-It determine the integration & efficiency of the supply chain.
-Each component has sub-components whose importance varies depending on the
process being managed.

Primary Component of SCM

1.Planning & control methods:-The control aspects can be operationalized as the best
performance metrics for measuring supply chain.
2. Workflow/activity structure: -It indicates how the firm performs its task & activities.
3. Organization structure : - It can refer to the individual firm & the supply chain.
4. Communication & information flow facility structure:-It refers to the information
network that has been developed for management of the supply chain. EDI would be
integral to this.
5. Product flow facility structure:- It refers to the network structure for sourcing,
manufacturing, & distribution across the supply chain & also, coordination of new
product development & product portfolio planning processes across the supply chain.
6. Management methods: - They include corporate philosophy & management
techniques. The level of management involvement in day to day operation can differ
across supply chain members.
7. Power & leadership structure: - It will affect its form & the level of commitment of
other supply chain members.
8. Risk & reward: - Anticipation of risk & reward shared across the supply chain
affects the long-term commitment of members.
9.Culture & attitude: - The culture of an organization determines how employees are
valued & incorporated into the management of the firm.
 SCM
Component

Physical & Managerial &

technical behavioral
component component