1. Understanding the Supply Chain

2. 1.Explain the concept of supply, supply chain and supply chain management. 2.Discuss the critical linkages in a supply chain. 3.How does Decision Phases plays role in a Supply Chain 4.Explain the concept of “extended supply chain” and the issues therein 5.Which are the critical decision making areas in the supply chain 6.“Supply chain management is a road map to success for a business” Explain… 7.Discuss the various process views of supply chain with example. 8.Detail the reasons for developing supply chain. 9.Elaborate the various kind of roles Macro Processes play in Supply Chain with type. Assignment questions

3. Goal of a supply chin and impact on the success of a firm. Three key supply chain decision phases. Cycle and push/pull views of a supply chain Supply chain macro processes in a firm. Understanding the Supply Chain

4. What Is a Supply Chain? The Objective of a Supply Chain The Importance of Supply Chain Decisions Decision Phases in a Supply Chain Process Views of a Supply Chain Understanding the Supply Chain

5. The logistics function gave rise to supply chain. World War II was won by countries whose military had an efficient logistics system to supply arms, food and medicines in time to the battle field. Today, banks compete for customer base by having a wide and efficient supply chain network of ATMs. The supply chain network aids in customer service and retention. Departments functioning in isolation have integrated for visibility, cycle time reduction and streamlined flow of goods and services. How did the supply chain evolve? LEVEL 1 CERTIFICATE IN LOGISTICS AND WAREHOUSING OPERATIONS 5 Internal supply chain Sourcing Production Distribution Supplie rs Custome rs Evolution of the supply chain

6. 1.5 Evolution of Supply Chain Management 1950s 1960s 1970s 1980s 1990s 2000s Beyond Traditional Mass Manufacturing Inventory Management/Cost Optimization JIT, TQM, BPR, Alliances SCM Formation/ Extensions Further Refinement of SCM Capabilities

7. A Supply is the quantity of inventory or goods available for use or the actual replenishment of a product or component A Supply Chain is the link connecting a set of facilities, companies, demand and supply points, and service providers. SCM is the systematic and strategic coordination of all business functions within a company and across businesses within the supply chain to improve the long term performance of individual companies and supply chain as a whole Supply, Supply Chain, SCM

8. Supply chain management definition The term “Supply Chain Management” was first coined by consultant Keith Oliver of the Strategy Consulting firm Booz Allen Hamilton in 1982. 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

9. What is a Supply Chain? A supply chain is a sequence of processes and flows that takes place within and between difference stages and combine to fill a customer need for a product. All stages involved, directly or indirectly, in fulfilling a customer request

10. Supply Chain… Customer is an integral part of the supply chain Includes movement of products from suppliers to manufacturers to distributors and information, funds, and products in both directions Typical supply chain stages: customers, retailers, wholesalers/distributors, manufacturers, component/raw material suppliers All stages may not be present in all supply chains (e.g., no retailer or distributor for Dell)

11. Flows in a Supply Chain FIGURE 1-2

12. The Objective of a Supply Chain Maximize overall value generated Supply Chain Surplus = Customer Value – Supply Chain Cost

13. Supply chain linkages Supplier partnership Material Planning Material Scheduling Procurement Master Scheduling Just-in-time Management Flexibility Manufacturing Demand Management Quick Response Postponement Distribution Inventory inflow Information flow Cash flow

14. The Objective of a Supply Chain Customer the only source of revenue Sources of cost include flows of information, products, or funds between stages of the supply chain Effective supply chain management is the management of supply chain assets and product, information, and fund flows to grow the total supply chain surplus

15. Resource deposit/growth Supply chain and its stakeholders LEVEL 1 CERTIFICATE IN LOGISTICS AND WAREHOUSING OPERATIONS 15 Information flow Goods and services flow Reverse logistics (returns) Consumption Product disposal Mother EarthConvertersSuppliers Manufacturers ExtractorsDistributorsEnd Customer (Source of funds) Ore to door cycle Production/supply Manufacturing/a ssembly Distribution Consumption Cash flow Reverse logistics - cash flow

16. Provide raw material/components to the manufacturing company for further process. Suppliers Convert the raw material/components into finished products and send it to warehouses for dispatch. Manufacturers Store the finished products in a safe environment, repack and send it to the various distribution/consumption points. Warehouses Shift the finished goods in a safe and timely manner to the distributors to enable a wider reach for the product. Transporters Intermediaries who purchase large quantities of goods from the manufacturer and then sell it to the retailers. Distributors Important interface between the manufacturers and the consumers. They know the customer’s demands, changes in preferences etc. Retailers They are the people who pay for the goods and consume it. They are the initiators of the entire supply chain cycle. Consumers Key stakeholders in a supply chain LEVEL 1 CERTIFICATE IN LOGISTICS AND WAREHOUSING OPERATIONS 16

17. Extended SCM Generic Customized

18. Reasons for Developing Supply chains Greater competitive advantage Greater value to consumers Reduces the lead time gap Faster and smaller deliveries to intermediate customers Introduces the concept of increased shareholder value These reasons give rise to the notion in future, we will see the supply chains competing with supply chains rather than competition between Org..

19. How supply chain makes a difference? LEVEL 1 CERTIFICATE IN LOGISTICS AND WAREHOUSING OPERATIONS 19 Benefits of a good SCM system For the customer 1.Timely availability 2.Wider choice 3.Best price 4.Good customer service For the organisation 1.Provide better service than competition 2.More satisfied and loyal customer base 3.Lesser cost of operation and hence more profits Effect of a bad SCM system For the customer 1.Non-availability of required goods 2.Limited choice / variety 3.Higher price of goods 4.Poor customer service For the organisation 1.Leads to uncompetitiveness 2.Loss in customer base and loyalty 3.Increased cost leading to losses

20. Evolution of supply chain concept In the past the functions of logistics, transportation, purchasing and supplies were referred as SCM. SCM looks into process integration, inventory visibility, cycle time reduction and channel coordination. The integration covers: Procurement and inventory movement Supplier development and integration Operation management Channel and distribution management

21. Importance of Supply Chain Decisions Success of supply chains depends on the close connection between the design and management of supply chain flows : 1.Product 2.Information 3.Fund

22. Decision in Supply Chain Network related Vendors related Production related Inventory related Distribution related Information related

23. Network related Choice of location of supply points near demand points including production facilities, stocking and sourcing points. Commitment of resources for a long term planning horizon Great significance to market in reaching the market Impacts costs, revenue, cost and level of services Strategic in nature with impact on operational level activities

24. Vendor related Multiple/sole Reliable supplier to run the production schedule Reducing supplier base enhances buyer control on the procurement process Sole sourcing TELCO Nano car : Supplier at low cost by ensuring high quality and delivery at short notice. Ex., Sona Steering as single supplier McDonalds: Mutton from Hyderabad Al Khabeer, Lettuce is flown from Pune and Otty, buns from Ludhiana, Cheese from Baramati (Maharastra). Hubs of cold chain are located in the North and West and managed by Radhkrishna Foodland for dispatches and supplies

25. Production related Product mix, location of plant and suppliers base to the plant. Impacts revenue, costs and customer service levels of the firm Includes Production planning, manufacturing and equipment maintenance Workload balancing and quality control measures Competitive markets – variety of products Flexible manufacturing systems to produce volume and varieties Ex. SKF Ltd producing 20K + bearings

26. Inventory related Raw materials, semi finished and finished products Reduce the level of uncertainty in the supply chain Inventory hold costs between 20 to 25% of material value Strategic in nature as excess inventory eats not profits… Includes: optimal level or order quantity, reorder points, safety stock level at each stock holding location

27. Distribution related Selection of mode of transportation Transportation mix Shipment size, vehicle routes and dispatch scheduling are part of transport strategy Wallmart distribution centers

28. Information flow related Competition among SCM Better integration among SCM Success depends upon its ability to build information architecture Internal and external partners

29. Decision Phases in a Supply Chain 1.Supply chain strategy or design How to structure the supply chain over the next several years 2.Supply chain planning Decisions over the next quarter or year 3.Supply chain operation Daily or weekly operational decisions

30. Supply Chain Strategy or Design Decisions about the configuration of the supply chain, allocation of resources, and what processes each stage will perform  Strategic supply chain decisions ◦Outsource supply chain functions ◦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

31. Supply Chain Strategy - objectives  Cost reduction is d irected towards minimizing the variable costs associated with movement and storage. Chosen by evaluating the alternative courses of action i.e., difference warehouse, alternative transport  Capital reduction is directed towards minimizing the level of interment in the SC system. Maximizing the return  Service improvement strategies usually recognize that revenues depend on the level of logistics service provided. Developed in contrast provided by the competitor

32. Supply Chain Planning Definition of a set of policies that govern short-term operations Fixed by the supply configuration from strategic phase Goal is to maximize supply chain surplus given established constraints Starts with a forecast of demand in the coming year

33. Supply Chain Planning Planning decisions: ◦Which markets will be supplied from which locations ◦Planned buildup of inventories ◦Subcontracting ◦Inventory policies ◦Timing and size of market promotions Must consider demand uncertainty, exchange rates, competition over the time horizon in planning decisions

34. Supply Chain Operation Time horizon is weekly or daily Decisions regarding individual customer orders Supply chain configuration is fixed and planning policies are defined Goal is to handle incoming customer orders 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 Short time horizon - much less uncertainty

36. Process Views of a Supply Chain 1.Cycle View: The processes in a supply chain are divided into a series of cycles, each performed at the interface between two successive stages of the supply chain. 2.Push/Pull View: The processes in a supply chain are divided into two categories, depending on whether they are executed in response to a customer order or in anticipation of customer orders. Pull processes are initiated by a customer order, whereas push processes are initiated and performed in anticipation of customer orders.

37. Sub process in each Cycle View

38. Push/Pull View of Supply Chain Processes Supply chain processes fall into one of two categories depending on the timing of their execution relative to customer demand Pull: execution is initiated in response to a customer order (reactive) Push: execution is initiated in anticipation of customer orders (speculative) Push/pull boundary separates push processes from pull processes

39. Companies use marketing techniques to identify and communicate with their audience. It is a technique used to bring the customer to you This include advertising and mass media promotion, word-of- mouth referrals, sales promotions and discounts, and customer relationship management. Pull View of Supply Chains

40. Refers to the customer actively seeking out your product and retailers placing orders for stock due to direct consumer demand. Requires a highly visible brand which can be developed through mass media advertising or similar tactics. If customers want a product, the retailers will stock it – supply and demand in its purest form, and this is the basis of a pull strategy. Create the demand, and the supply channels will almost look after themselves.

41. A push strategy tries to sell directly to the consumer, bypassing other distribution channels. A push promotional strategy involves taking the product directly to the customer via whatever means, ensuring the customer is aware of your brand at the point of purchase. “Taking the product to the customer” Push View of Supply Chains

42. Examples of push tactics Trade show promotions to encourage retailer demand Direct selling to customers in showrooms or face to face Negotiation with retailers to stock your product Efficient supply chain allowing retailers an efficient supply Packaging design to encourage purchase Point of sale displays Push View of Supply Chains

43. Supply Chain Macro Processes Supply chain processes discussed in the two views can be classified into 1.Customer Relationship Management (CRM): All processes at the interface between the firm and its customers 2.Internal Supply Chain Management (ISCM): All processes that are within or internal to the firm 3.Supplier Relationship Management (SRM): All processes at the interface between the firm and its suppliers

44. Supply Chain Macro Processes Apple

45. Global supply chain with long lead times Rising and shifting customer expectations Increase in labor costs in developing countries Increase in labor costs in developing countries Increase in logistics costs Today’s Supply Chain Challenges