Value & Supply Chain

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  • 1. Value Chain & Supply Chain
    • LOGISTICS:
    • THE PROCESS OF PLANNING, IMPLEMENTING AND CONTROLLING THE EFFICIENT, COST-EFFECTIVE FLOW AND STORAGE OF RAW MATERIALS, IN-PROCESS INVENTORY, FINISHED GOODS AND RELATED INFORMATION FROM POINT-OF-ORIGIN TO POINT OF FINAL CONSUMPTION FOR THE PURPOSE OF CONFORMING TO CUSTOMER REQUIREMENTS.
        • (US Council of Logistics Management, 1986)
  • 2.
    • Logistics (contd.)
    • KEY FEATURES OF LOGISTICS :
    • CONCERNED WITH MOVEMENT & STORAGE OF MATERIALS
    • CONCERNED WITH MANAGING THE INFORMATION FLOWS THAT UNDERPIN THE FLOW OF MATERIALS
    • SCOPE RANGES ACROSS THE WHOLE SUPPLY CHAIN FROM POINT OF ORIGIN OF RAW MATERIALS THROUGHOUT THE SUPPLY CHAIN
    • HAS TWO KEY OBJECTIVES
        • ACHIEVING APPROPRIATE CUSTOMER-SERVICE STANDARDS
        • DOING SO IN A COST-EFFECTIVE MANNER
  • 3.
    • LOGISTICS ISSUES :
      • LEVEL 1  THE SPECIFIC FUNCTION IN WHICH THE PROBLEM OCCURS (eg: the warehouse)
      • LEVEL 2  THE OTHER FUNCTIONS WITHIN THE FIRM WHICH RELATE TO THE FLOW OF MATERIALS OR INFORMATION (eg: purchasing, manufacturing, marketing)
      • LEVEL 3  THE WIDER SUPPLY CHAIN BEYOND THE BOUNDS OF THE FIRM (eg: suppliers, distribution channel members, end users)
  • 4. SUPPLY CHAIN MANAGEMENT
    • THE SUPPLY CHAIN ENCOMPASSES ALL ACTIVITIES ASSOCIATED WITH THE FLOW AND TRANSFORMATION OF GOODS FROM THE RAW MATERIALS STAGE (EXTRACTION), THROUGH TO THE END USER, AS WELL AS THE ASSOCIATED INFORMATION FLOWS. MATERIAL AND INFORMATION BOTH FLOW UP AND DOWN THE SUPPLY CHAIN
    • Definition 1:
    • SUPPLY CHAIN MANAGEMENT (SCM) IS THE INTEGRATION OF THESE ACTIVITIES THROUGH IMPROVED SUPPLY CHAIN RELATIONSHIPS, TO ACHIEVE A SUSTAINABLE COMPETITIVE ADVANTAGE.
  • 5.
    • Definition 2: (AS PER THE VALUE CHAIN CONCEPT)
    • SUPPLY CHAIN IS THE NETWORK OF FACILITIES AND ACTIVITIES THAT PERFORMS THE FUNCTIONS OF
      • PRODUCT DEVELOPMENT,
      • PROCUREMENT OF MATERIAL FROM VENDORS,
      • THE MOVEMENT OF MATERIALS BETWEEN FACILITIES,
      • THE MANUFACTURING OF PRODUCTS,
      • THE DISTRIBUTION OF FINISHED GOODS TO CUSTOMERS, AND
      • AFTER-MARKET SUPPORT FOR SUSTAINMENT.
    • NOTE: The logistics definition suggests a stronger emphasis on the flow and storage of material. Whereas, the supply chain concept places greater weight on network design elements such as facility network and product development.
  • 6. Collaborative Planning, Forecasting and Replenishment ( CPFR )
    • One way to describe a B2B relationship that is based on CPFR is a “ value chain ” .
    • A Value Chain is a buyer (demand chain) and seller (supply chain) tied together in a manner that data is exchanged, systems and processes are integrated, and business plans (replenishments and sales forecasts) are jointly derived and executed against (collaboration).
    • Consequently the very use of the phrase “ supply chain ” generally results in a discussion around the seller’s enterprise – and “ demand chain ” around the customer or market. A value chain brings the two groups together and forges strategic relationships.