Supply chain management (SCM) is the management of a network of interconnected business involved in the ultimate provision of product and service packages required by end customers. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption .
Supply chain management is the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole
According to the Council of Supply Chain Management Professionals(CSCMP), supply chain management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management. It also includes the crucial components of coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers.
What is SCM ?
SCM is a business network covering from buying, making, moving, warehousing to selling
Dynamics of Material Flow
Supply Chain Benefits
Reduced total system costs
Establishment of a collaborative framework
Near real time information flow
Reduced variation and increased quality
Business growth opportunities
Preferred source for new opportunities
Expanded benefits to other customers
Potential Benefits from SCM
Increased market share and sales growth
Reduced inventory levels and total SCM costs
Decreased order cycle/fulfillment time
Increased asset and capital utilization
Improved delivery performance
Faster response to changing customer requirements
Improved return on assets and sales
Increased forecast accuracy
Reduced cash-to-cash cycle time
ELEMENTS OF SCM
What is inventory
The stock of material lying with you for which payments are made but which are yet to be delivered to the customers and paid for by them.
Material stocked to meet the expected demand in the market.
3.An idle resource which locks the capital.
Features of a good warehouse
FMFO – First Manufactured and First Out principle.
Maintenance of prompt and correct records.
Fast and courteous service to customers.
Minimum damages to the material.
Place for everything and everything in its place.
Protection against pilferage.
Regular verification and inspection of material.
Regular inventory taking and reconciliation.
Maintaining inventory within specified norms.
'Logistics is the process of strategically managing the procurement, movement and storage of materials (and related information flows) through the organization and its marketing channels
Objectives of Transport Management
Transportation/logistics as a competitive differentiator.
Time to market
Supply Chain Strategy
“Companies are investing resources--of both time and capital--to improve their supply chain capabilities. But many are not pleased with the return on these investments. The lack of coherent supply chain strategy typically lies at the root of the problem.”
SC Relationship Barriers
Lack of Trust
Little Understanding or Commitment to SC Principles
Fear of Relinquishing Control
Different Goals & Objectives
Inadequate Information Systems
Short-term / “Wall Street” emphasis on outcomes
Involvement in too many supply chains
SC Relationship Barriers--Solutions
Develop a New Breed of Manager
Build “Relationship-Management” Skills
Establish Inter-organizational Teams
Create New Performance Measures
Invest in Information Technology
Develop Long-term Focus (Boards, too)
Engage in More Practical and Applied Research
Problems addressed by supply chain management
Distribution Network Configuration:
Trade-Offs in Logistical Activities:
Strategic network optimization, including the number, location, and size of warehousing, distribution centers, and facilities.
Strategic partnershipswith suppliers, distributors, and customers, creating communication channels for critical information and operational improvements such as cross docking, direct shipping, and third-party logistics.
Sourcing contracts and other purchasing decisions.
Production decisions, including contracting, scheduling, and planning process definition.
Inventory decisions, including quantity, location, and quality of inventory.
Transportation strategy, including frequency, routes, and contracting.
Daily production and distribution planning, including all nodes in the supply chain.
Production scheduling for each manufacturing facility in the supply chain (minute by minute).
Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the forecast with all suppliers.
Supply chain business process integration
Successful SCM requires a change from managing individual functions to integrating activities into key supply chain processes
Supply chain business process integration involves collaborative work between buyers and suppliers, joint product development, common systems and shared information.
Components of SCMIntegration
Planning and control
Product flow facility structure
Information flow facility structure
Power and leadership structure
Risk and reward structure
Culture and attitude
Tax efficient supply chain management
Tax Efficient Supply Chain Management is a business model which consider the effect of Taxin design and implementation of supply chain management. As the consequence of Globalization, business which is cross-nation should pay different tax rates in different countries. Due to the differences, global players have the opportunity to calculate and optimize supply chain based on tax efficiencylegally. It is used as a method of gaining more profit for company which owns global supply chain.