Download presentation
1
Supply Chain Management
Business Mantras Supply Chain Management Presented by: Priyanka singh
2
Structure Followed What is Supply chain? Objective of a supply chain
Supply Chain Management Bull Whip effect Drivers of Supply chain performance Inventory policies Types of Distribution networks
3
What is Supply chain? Consists of all parties involved, directly or indirectly, in fulfilling a customer request Supplier Manufacturer Distributor Retailer Customer
4
Is supply chain so simple?
Supplier Manufacturer Distributor Retailer Customer Supplier Manufacturer Distributor Retailer Customer Dell Supplier Manufacturer Distributor Retailer Customer Upstream Downstream
5
Process View Customer Pull Retailer Distributor Push Manufacturer
Customer Order Cycle Pull Retailer Replenishment Cycle Distributor Manufacturing Cycle FMCG Push Manufacturer Procurement Cycle Supplier
6
Objective of a Supply Chain
Maximise overall profit Profit Revenue generated from customer - costs incurred along the entire chain (e.g. manufacturing / storing / distributing the product) When is Supply chain effective? Manage Product, Information and Fund flow
7
what is SCM? Objective is to be able to have the right products in the right quantities (at the right place) at the right moment at minimal cost.
8
Bull Whip Effect Each organisation seek to solve the problem from its own perspective Small changes in consumer demand result in large variations in orders placed upstream Dramatic order size variation Amplification of order size variation as one moves up the supply chain Pampers Diapers Delay 2 weeks Delay 2 weeks Delay 2 weeks Supplier Manufacturer Distributor Retailer Customer Orders 40 Orders 25 Orders 15 Buys 10
9
Causes Little or no communication between supply chain partners.
Delay times between order processing, demand, and receipt of products. Over reacting to the backlog orders. Inaccurate demand forecasts.
10
Drivers of Supply Chain Performance
Facilities Production/Storage Sites Responsiveness Vs Efficiency Toyota
11
Drivers of Supply Chain Performance
Inventory Raw materials WIP Finished Goods Responsiveness Vs Efficiency Sourcing Outsourcing Transportation
12
Transportation Total costs Cost Transport costs Inventory costs Rail
Air
13
Inventory Where do we hold inventory? Types of Inventory
Suppliers and manufacturers warehouses and distribution centers retailers Types of Inventory raw materials WIP finished goods Why do we hold inventory? Uncertainty in supply and demand Lead Time Avoid stock outs (customer goodwill)
14
Terms Involved Inventory lot size Replenishment Lead time Stock out
Reorder Point Safety stock
15
Relevant Costs in an Inventory System
Procurement costs Ordering cost (appx. administrative, inspection, transportation etc.) Holding costs Maintenance and Handling Taxes Obsolescence Stock-outs costs Lost sales (Customer goodwill) Backorders
16
Profile of Inventory Level Over Time
The Inventory Cycle Profile of Inventory Level Over Time Q Demand rate Constant Demand Quantity on hand Reorder point Time Receive order Place order Receive order Place order Receive order Lead time
17
Decisions When to order How much to order Types of System
Continuous Review Periodic Review
18
EOQ: A View of Inventory
Note: • No Stockouts • Order when no inventory • Order Size determines policy Inventory Order Size Time
19
EOQ - Cost Minimization Goal
The Total-Cost Curve is U-Shaped Annual Cost Holding Costs Ordering Costs Order Quantity (Q) QO (optimal order quantity) or EOQ
20
EOQ: Important Observations
Tradeoff between set-up costs and holding costs when determining order quantity. Total Cost is not particularly sensitive to the optimal order quantity
21
Types of System – Continuous Review
Continuously monitored R – Reorder point, L – Lead time Q – Order quantity Time b/w orders vary but Q is fixed
22
Periodic Review Monitored at periodic intervals of length “r”
Quantity set as the amount consumed during this interval Time b/w orders fixed
23
Distribution Steps taken to move and store a product from supplier to customer Design Options Manufacturer storage with direct shipping Manufacturer storage with direct shipping and in-transit merge Distributor storage with package carrier delivery
24
Manufacturer storage with direct shipping
Retailer Customers Drop Shipping
25
Manufacturer storage with direct shipping and in-transit merge
Retailer In-transit Merge by carriers Customers
26
Distributor storage with carrier delivery
Manufacturer Warehouse Storage by Distributor/Retailer Customers
27
To Summarize Components of supply chain (SC)
Objective of SC is to max. profit Bull whip effect Facilities decisions Inventory policies Distribution networks
28
Thank You
Similar presentations
© 2025 SlidePlayer.com. Inc.
All rights reserved.