Music 9 - 4th quarter - Vocal Music of the Romantic Period.pptx
Scm
1. WORK SHOP ON SUPPLY CHAIN
MANAGEMENT
OUTBOUND
LOGISTICS
MANAGEMENT
C K NAGENDRA GUPTHA,
Dept. of I E M, R V College of Engineering
2. Companies are facing rapidCompanies are facing rapid
change and are under a variety of pressureschange and are under a variety of pressures
• An increased focus on Globalization
• An increased focus on Supply Chain Management
TODAY’S OPERATING ENVIRONMENTTODAY’S OPERATING ENVIRONMENT
Mass
Customization
Reduce Time
to Markets
Introduce
New Products
Frequently
Customize products
in Niche Markets
Sell
Globally
CompaniesCompanies
Reduce
Costs
3. CUSTOMER EXPECTATIONS
• Many players in each industry - domestic / international /
unorganised: competition in all segments
• Expectations being shaped by products & services across
industries
• Unwilling to bear inefficiencies / costs of suppliers
• Increasing need for customized services & products
• Need for responsiveness in fast changing scenarios
• Loyalty cannot be taken for granted
4. WHAT DOES THIS MEAN FOR THE
MANUFACTURER?
• “Loyal consumers” may switch to
competition if desired product is not
available / delivered
• Retailers expect immediate
response to product / service needs
• Distributors are unwilling to carry
inventory beyond accepted norms
• Cost of inventory in the supply chain
is eventually borne by manufacturer
5. COMPETITIVE PRESSURES
Rapid SKU
proliferation
To address
different
customer
segments:
•Increasing need
for wide variety
•Great push to
introduce new
products rapidly
Forecasting
Errors
Long cycle
times
High
uncertainty
7. • Being responsive to market needs & changes
• Optimise on inventory levels across the chain:
vendor, mfr., distributor, retailer, etc
• OTIF: Order fulfillment on time in full
OBJECTIVES OF SCM:
9. If you think it is to...
Manage the component parts from Suppliers
Manage inbound freight
Manage outbound freight
Manage product distribution
Manage logistics and warehouses
SUPPLY CHAIN MANAGEMENT
10.
11. SCM requires managing the flow
of information & material….
across suppliers, manufacturer, CFAs,
distributors, retailers etc. to meet customer
expectations
12. A WELL-DESIGNED SUPPLY CHAIN ADDRESSES
ISSUES THROUGHOUT THE CHAIN:
Time to Market
Lead Times / cycle times
Inventory formation and accumulation
Information and demand flow
Product flow
Planning & procurement processes
Distribution and logistics
13. SUPPLY CHAIN DESIGN
Information
Supplier Supplier Manufacturer Wholesale Distribution Sales
Level 3 Level 2
Means:
Evolves to:
- Seam less Flow
- Eliminate waste
- Reduce cycle time
Profitability
Customer Satisfaction
ROA
EPS
Materials & Products
Waste Waste Waste Waste Waste
14. INFORMATION FLOW :
A CRITICAL COMPONENT OF SCM
• Flow of information up & down the
chain is as important as Material Flow
• Helps reduce uncertainty
• Improves credibility & defines customer
expectations
• In the internet age - it will be a must for
all supply chains
• IT is playing a big role in keeping
communication flowing
15. IMPROVING INFORMATION FLOW IS
CRITICAL TO ACHIEVING A WORLD
CLASS SUPPLY CHAIN
2
18
37
43
0
0 10 20 30 40 50
Not Important
Somewhat
Important
Important
Very Important
Critical
% of Respondents
16. METHODS TO IMPROVE INFORMATION
FLOW: ROLE OF IT
• ERP systems
– Focus on transaction processing
– Integrates various functions within the organisation
– Ensures connectivity across geographic locations
– Provides a clean & single information back bone
– Is fast becoming an industry standard
– Helps the organisation to become process oriented
• E-connectivity
– Is useful as a medium for connectivity across various entities
– Cheaper , faster , non-hierarchical (network)
17. ROLE OF IT… CONTD.
• SCM Packages
– Used mainly as a decision support tool in the planning
function
– Optimise various planning processes: forecasting, demand
planning, factory planning, etc..
– Helps modify the planning process based on real time
changes or constraints in the operations e.g.: likely order
completion date due to unforeseen delays, etc
– Draw basic information from ERP / other transaction
processing systems
18. PERFORMANCE MEASURES
• Motivation of supply chain links can improve only if
performance measures are put in place
• Focus of performance measures on Interfaces between
entities of the chain in place of independent individual
entity performance
• Performance measures need to be derived from overall
objective of supply chain - I.e. they need to be aligned
across the chain
19. PERFORMANCE MEASURES
Some common examples:
• Production alignment to demand
• Order Fulfilment ratio (On time in full) or Availability cover
• Forecasting efficiencies
• Distribution efficiency
• Vendor rating on delivery reliability, lead times
• Inventory turns
• Cycle times / Response time / Average Lead time
20. SCOPE OF SCM
• Demand Planning
• Production Planning
• Distribution planning
• Supply Chain Strategies
• Information management
• Performance Measures
21. EXTENDING THE SUPPLY CHAIN TO
INCLUDE OUR BUSINESS ASSOCIATES
Aligned
Distribution
The New LinkSynchronized
Production
Trade
SUPERMARKET
RDS/WOTSuppliers
Factory
Tomorrow - Demand Communication
CFA
Tomorrow - Inventory Visibility
Today
23. Today - with SAP R/3
Showroom
SUPERMARKET
RDS
Factory
CFACorporate
RO
SAP R/3
24. HOW IS THIS HELPING US?
• Facilitation of CRP flow
• Better distribution and stock
correction
• Smarter demand planning
• Rapid demand communication
• Responsive supply chain -
changes in demand / supply
being incorporated
25. TOMORROW - A “PULL” BASED SYSTEM
ACROSS THE SUPPLY CHAIN
ConsumerShowroomPlantsSuppliers
RDS
CFA
Extended CRP system
26. THE EXTENDED SUPPLY CHAIN
A win-win situation
– Secondary sales data will be available to us
leading to sharper forecasting
– Pull system will ensure leaner inventories across
the chain
– Increased availability of A category products for
BAs
– Leading to better customer service (End &
intermediate customers)
28. Components of Logistics Management
Management Actions
Planning Implementation Control
Natural resources
(land, facilities, &
equipment
Human resources
Financial
resources
Information
resources
Marketing
orientation
(competitive
advantage)
Time & place
utility
Efficient
movement to
customer
Proprietary asset
Raw
materials
In-process
inventory
Finished
goods
Logistics Management
Suppliers
Vendors
• Customer service
• Demand forecasting
• Distribution communication
• Inventory control
• Material handling
• Order processing
• Parts and service support
• Plant & warehouses site selection
• Procurement
• Packaging
• Return goods handling
• Salvage and scrap disposal
• Traffic and transportation
• Warehousing and storage
Logistics Activities
Inputs into
Logistics
Outputs of
Logistics
30. CHANNELS OF DISTRIBUTION
• A channel of distribution can be defined as the
collection of organization units either internal or
external to the manufacturer, which performs the
functions involved in the product marketing.
• The functions of marketing include:
– Buying - Providing marketing Information
– Selling - Grading
– Transporting - Financing
– Storing
The channel member performs one or more of the
above functions
32. Alternative Channels of Distribution for Industrial Goods
Manufacturer ManufacturerManufacturer Manufacturer
Industrial User
Agent or
broker
Industrial user
Industrial
Distributor
Industrial user
Agent or
broker
Manufacturer
Industrial
User
34. Distribution Channels – Grocery Products Manufacturer
Suppliers
Manufacturer
Plant
Another plant
Field
Warehouses
Wholesalers
Chain store
warehouses
Co-ops Military
Retailers
Consumers
Product flows
Information flows
Key:
35. Inventory Positions and Major Flows in a channel
of distribution
Supplier Manufacturer Wholesalers Retailers
Orders
Payments
Information
Product
Orders
Payments
Information
Product
Orders
Payments
Information
Product
Variable cost
of product
$5 Variable cost of
material
$10 Variable cot of
product
$60 Variable cost of
product
$80
Full
manufactures
cost
$7 Acquisition costs $1 Other
acquisition costs
$2 Other
acquisition
costs
$2
Selling price $10 Other variable
costs
$14 Selling price $80 Selling price $150
Total variable
cost of product
$25
Full
manufactured
cost
$40
Selling price $60
36. CHANNELS OF DISTRIBUTION -
Functions
• Reduce number of market contacts
• Provide utility by – sorting out, accumulating,
allocation, and assorting.
• Routinization of transactions
• Reduce costs of – selling, transportation,
inventory carrying, storage and order processing
37. CHANNELS OF DISTRIBUTION – Channel
structure
• Postponement – of changes in form and
identity of a product and inventory location
to the last possible point in the marketing
process. E.g. mixing of paint,
• Speculation – Converse of postponement,
reduces costs through economies of scale
38. CHANNELS OF DISTRIBUTION – Design
process
• Establish channel objectives
• Formulate a channel strategy
• Determine channel structure alternatives
• Evaluate channel structure alternatives
• Select channel structure
39. CHANNELS OF DISTRIBUTION – Design
process
• Determine alternatives for individual channel
members
• Evaluate and select individual channel
members
• Measure and evaluate channel performance
• Evaluate channel alternatives when
performance objectives are not met
40. CHANNELS OF DISTRIBUTION – Design
considerations
Market coverage objectives
– Customer buying behavior
– Type of distribution – intensive, exclusive and
selective
– Channel structure
– Control
Customer service objectives
Availability
order cycle
Communication
41. CHANNELS OF DISTRIBUTION – Design
considerations
Product characteristics
– Value - Perishability
– Technicality - Market concentration
– Seasonality - Market acceptance
– Substitutability - Width and Depth
– Bulk
Profitability
42. CHANNELS OF DISTRIBUTION – Quick
Response
• Quick seeks to maximize customer satisfaction
by having the right inventory in the right
place, without incurring the expenses
associated with excess inventory
43. Channel Cost / Revenue Analysis – Contribution
Approach with a charge for assets Employed
Channel Alternative
1 2 3 4 5
Net Sales
Cost of good sold (variable manufacturing
cost)
Manufacturing contribution
Marketing and logistics costs
Variable costs:
Sales commissions
Transportation
Warehousing (handling in and out)
Order processing
Charge for investment in accounts
receivable
Segment contribution margin
44. Channel Cost / Revenue Analysis – Contribution
Approach with a charge for assets Employed
Channel Alternative
1 2 3 4 5
Assignable nonvariable costs (costs
incurred specifically for the segment
during the period):
Bade debts
Display racks
Sales promotion
Salaries
Segment related advertising
Other
Segment controllable marginCharge for assets used by segment
Net segment margin
