SUPPLY CHAIN AND LOGISTICS MANAGEMENT

UNIT-1: INRODUCTION TO SUPPLY CHAIN MANAGEMENT
MK 6.6 SUPPLY CHAIN AN
INTRODUCTION
In commerce, supply chain management
of goods and services between businesses and locations. This can
storage of raw materials, work-
fulfillment from point of origin to point of consumption. Interconnected, interrelated or
interlinked networks, channels
of products and services required by end customers in a
MEANING OF SUPPLY CHAIN
A supply chain is the network of all the individuals, organizations, resources, activities
and technology involved in the creation and sale of a produc
encompasses everything from the delivery of source materials from the supplier
to the manufacturer through to its eventual delivery to the end user
MEANING OF SUPPLY CHAIN MANAGEMENT
Supply chain management is the practice of coordinating the various activities necessary to
produce and deliver goods and se
activities can include designing, farming, manufacturing, packaging, or transporting.
1: INRODUCTION TO SUPPLY CHAIN MANAGEMENT
AND LOGISTICS MANAGEMENT
supply chain management (SCM) is the management of the flow
between businesses and locations. This can include the movement and
-in-process inventory, finished goods, and end to end order
channels and node businesses combine in the provision
required by end customers in a supply chain.
MEANING OF SUPPLY CHAIN
the network of all the individuals, organizations, resources, activities
and technology involved in the creation and sale of a product. A supply chain
h to its eventual delivery to the end user.
MEANING OF SUPPLY CHAIN MANAGEMENT
produce and deliver goods and services to a business’s customers. Examples of supply chain
1: INRODUCTION TO SUPPLY CHAIN MANAGEMENT Mr.Chethan.S
Mr.Chethan.S
Mr.Chethan.S
Mr.Chethan.S
NT Page 1
(SCM) is the management of the flow
include the movement and
process inventory, finished goods, and end to end order
combine in the provision
the network of all the individuals, organizations, resources, activities
. A supply chain
rvices to a business’s customers. Examples of supply chain

UNIT-1: INRODUCTION TO SUPPLY CHAIN MANAGEMENT
MK 6.6 SUPPLY CHAIN AN
SUPPLY CHAIN COMPANIES
IMPORTANCE OF SUPPLY CHAIN MANAGEMENT
• SCM lowers the cost of doing
and production expenses. For example, if you own a grocery store and buy tomatoes
directly from the farmer, you eliminate the expense of having a third party buy produce
for you. Purchasing directly fro
your shelves more quickly.
• SCM builds the partnerships that can support future growth.
store owner, develop strategic partnerships with farmers early in your business operation,
then the farmers can grow their operations as you grow yours.
• SCM helps balance the supply of products with market demand.
store example, if you are buying tomatoes directly from the farmer, you can better
negotiate and adjust how many tomatoes you buy each season.
1: INRODUCTION TO SUPPLY CHAIN MANAGEMENT
AND LOGISTICS MANAGEMENT
SUPPLY CHAIN COMPANIES EXAMPLE
NCE OF SUPPLY CHAIN MANAGEMENT
SCM lowers the cost of doing business. This is accomplished by reducing purchasing
for you. Purchasing directly from the source saves you money and places the food on
your shelves more quickly.
SCM builds the partnerships that can support future growth. If you, as the grocery
then the farmers can grow their operations as you grow yours.
SCM helps balance the supply of products with market demand. Using the grocery
negotiate and adjust how many tomatoes you buy each season.
1: INRODUCTION TO SUPPLY CHAIN MANAGEMENT Mr.Chethan.S
Mr.Chethan.S
Mr.Chethan.S
Mr.Chethan.S
NT Page 2
This is accomplished by reducing purchasing
m the source saves you money and places the food on
If you, as the grocery
Using the grocery

UNIT-1: INRODUCTION TO SUPPLY CHAIN MANAGEMENT Mr.Chethan.S
Mr.Chethan.S
Mr.Chethan.S
Mr.Chethan.S
MK 6.6 SUPPLY CHAIN AND LOGISTICS MANAGEMENT Page 3
• SCM allows for more efficient and effective customer service. This occurs because
customers receive their products quickly and as promised. For example, if the farmer
brings the tomatoes directly to your grocery store, then the product will likely be fresher
and less damaged than if it traveled through a third-party supplier before arriving on your
shelves.
The ultimate goal of effective supply chain management is higher profits through
improved customer satisfaction and a lower cost of doing business. Profits are healthier
when costs are controlled and reduced wherever possible. Operating costs go down when
the costs of raw materials and production go down.
SUPPLY CHAIN DECISION PHASES
1. Supply chain strategy or design:
In this supply chain decision phase, a company decides how to design the supply chain over the
next several years. The company decision includes – what’s the chain configuration will be?
How resources will be allocated? And what processes each stage will perform. Moreover, there
are some strategic decisions that a company should decide.
• In-house vs. outsource – managing order, subcontracting
• Location &capacities – production cost plus warehouse
• Transportation networking
• Strategic change – brick mortar vs. online
• Strategic change = supply chain surplus
2. Supply chain planning
Time is considered in a quarter to a year. Therefore, the previous phase determined the phase is
fixed. This phase establishes constraints within the organization. Supply chain planning is used
for solving the constraints. Therefore, this decision phase has a goal. This is to maximize the
supply chain surplus. Besides, this surplus can be achieved through supply chain planning
phase.
The company starts its decision on forecasting demand for the coming year or other factors or
costs and prices in different markets. Planning includes subcontracting of manufacturing,
inventory policies, timing, and size of marketing and price promotions.

Mr.Chethan.S
Mr.Chethan.S
Mr.Chethan.S
• Demand forecasting
• Procurement planning and control
• Production planning and control
3. Supply chain operations:
After completing the previous two phases, supply chain operations are needed to do. Here, The
time horizon is weekly or daily. In this phase, companies make decisions on managing individual
customer orders. Here, the supply chain configuration is considered fixed. And planning policies
are already defined. Besides, the goal of Supply chain operations is to handle incoming customer
orders in the best possible manner. During this phase, companies do-
• Inventory management
• Transportation management
• Customer order processing
• Relationship management
There is less uncertainty about demand information. The design, planning and operation phases
work in one frame. However, There is a strong influence on profitability and success. It is fair
that successful companies have a strong supply chain decision phases.
PROCESS OF SUPPLY CHAIN
• PLAN – Planning is the strategic part of the supply chain management process, to find
out the best possible blueprint of how to fulfill the end requirement. SCM managers
should identify a list of key components like plant location & size, warehouse designing,
delivery models, IT solutions’ selection, etc. Not only this, the supply chain management
process would be incomplete if key matrices like transportation cost modeling,
warehouse efficiency models, etc. are not developed.
• SOURCE – At this stage of supply chain management, the emphasis is on to ascertain
the most reliable of suppliers for raw materials so that the production process would
never jeopardize. But challenging conditions do arise during operations, supply chain
managers must ensure key pain points of supply cycle are always being tracked to keep
the engine running. Holisol believes that contractual framework as well as a selection of a
capable supplier is one thing, but there should be a tangible system in place for the
continuous development of suppliers which would boost their efficiency as well.

Mr.Chethan.S
Mr.Chethan.S
Mr.Chethan.S
• EXECUTE – This is the stage where well-designed processes are implemented so that a
perceivable shape is given to existing plans in the form of manufactured products which
are ready for testing, packaging, and delivery. Not only this, results at this stage are
quantified so that maximum possible efficiency is achieved. Holisol’s specialists design
cost-effective IT solutions which enable customers in building excellence and improving
efficiency at the execution stage of the supply chain management process.
• DELIVER – Supply chain when reaches this stage, the managers have a task at hand to
deliver the product/service in the right quantity, at the right place and right time by
employing suitable carriers. Supply chain managers should be fully equipped with
modern IT tools to keep a track on warehousing networks, inventory models as well as
invoicing and payment receipts.
• RETURN – Returns’ handling is the last step of the supply chain management process. It
not only involves reviewing returned products for quality purposes but also managing
their inventory. At the ground level, supply chain managers should deploy their resources
supporting them with technology for faster pickups, quicker replacements, etc. Returns
management should be a value enhancement measure in the eyes of supply chain
managers and they must ensure every desirable measure is taken for maximum possible
efficiency.
TYPES OF SUPPLY CHAIN MODELS
Supply chain management does not look the same for all companies. Each business has its own
goals, constraints, and strengths that shape what its SCM process looks like.
In general, there are often six different primary models a company can adopt to guide its supply
chain management processes.
1. Continuous Flow Model: One of the more traditional supply chain methods, this model
is often best for mature industries. The continuous flow model relies on a manufacturer
producing the same good over and over and expecting customer demand will little
variation.
2. Agile Model: This model is best for companies with unpredictable demand or customer-
order products. This model prioritizes flexibility, as a company may have a specific need
at any given moment and must be prepared to pivot accordingly.
3. Fast Model: This model emphasizes the quick turnover of a product with a short life
cycle. Using a fast chain model, a company strives to capitalize on a trend, quickly
produce goods, and ensure the product is fully sold before the trend ends.

Mr.Chethan.S
Mr.Chethan.S
Mr.Chethan.S
4. Flexible Model: The flexible model works best for companies impacted by seasonality.
Some companies may have much higher demand requirements during peak season and
low volume requirements in others. A flexible model of supply chain management
makes sure production can easily be ramped up or wound down.
5. Efficient Model: For companies competing in industries with very tight profit margins,
a company may strive to get an advantage by making their supply chain management
process the most efficient. This includes utilizing equipment and machinery in the most
ideal ways in addition to managing inventory and processing orders most efficiently.
6. Custom Model: If any model above doesn't suit a company's needs, it can always turn
towards a custom model. This is often the case for highly specialized industries with
high technical requirements such as an automobile manufacturer.
INTEGRATED SUPPLY CHAIN MANAGEMENT
Integrated supply chain management refers to an enterprise resource planning approach to supply
chain management. A business facilitates relationships with all of its suppliers and manages all
distribution and logistics activities through a centralized system rather than having multiple
systems within the organization. Concentrated professional expertise and cost efficiency are core
benefits of the integrated supply chain process, but developing collaboration is an obstacle.
BENEFITS OF SUPPLY CHAIN INTEGRATION

Mr.Chethan.S
Mr.Chethan.S
Mr.Chethan.S
LEVELS OF SUPPLY CHAIN MANAGEMENT
Strategic - deals with future planning than in looking at market evaluation, capacity
issues, new products, and technology changes. This is accomplished at the executive
management level.
Tactical - involves a shorter planning cycle. It is more concerned demand planning,
inventory planning, and supply planning. This is determined at a less senior level than
Strategic SCM.
Operational - deals with current planning activities measured in at most weeks. It
includes demand fulfillment, scheduling, production, transport, and monitoring.
SCOPE AND BREADTH OF SUPPLY CHAIN MANAGEMENT

Mr.Chethan.S
Mr.Chethan.S
Mr.Chethan.S
AREAS OF SUPPLY CHAIN
• Purchasing: The purchasing function is core to any company, as it provides the
materials and resources needed to create a product. As the economy becomes more
global, the opportunities become even more exciting. The roles that exist within this
function are numerous, and here are just a few: coordinator or analyst, materials
manager, corporate purchasing manager. These roles can exist at a field location such as
a plant or at a corporate location. Depending on the company, individuals could be
involved in purchasing anything from office supplies to parts for the construction of
airplane engines.
• Manufacturing: is the production of merchandise for use or sale using labour and
machines, tools, chemical and biological processing, or formulation. The term may refer
to a range of human activity, from handicraft to high tech, but is most commonly applied
to industrial production, in which raw materials are transformed into finished goods on a
large scale. Such finished goods may be used for manufacturing other, more complex
products, such as aircraft, household appliances or automobiles, or sold to wholesalers,
who in turn sell them to retailers, who then sell them to end users and consumers.
• Inventory Management: Activities employed in maintaining the optimum number or
amount of each inventory item. The objective of inventory management is to provide
uninterrupted production, sales, and/or customer-service levels at the minimum cost.
Since for many companies inventory is the largest item in the current assets category,
inventory problems can and do contribute to losses or even business failures.
• Demand Planning: is the process of forecasting customer demand to drive execution of
such demand by corporate supply chain and business management. Demand forecasting
involves techniques including both informal methods, such as educated guesses, and
quantitative methods, such as the use of historical sales data and statistical techniques or
current data from test markets. Demand forecasting may be used in production planning,
inventory management, and at times in assessing future capacity requirements, or in
making decisions on whether to enter a new market.
• Warehousing: Performance of administrative and physical functions associated with
storage of goods and materials. These functions include receipt, identification, inspection,
verification, putting away, retrieval for issue, etc.
• Transportation: is the movement of people, animals and goods from one location to
another. Modes of transport include air, rail, road, water, cable, pipeline and space. The
field can be divided into infrastructure, vehicles and operations. Transport is important
because it enables trade between persons, which is essential for the development of
civilizations.

Mr.Chethan.S
Mr.Chethan.S
Mr.Chethan.S
• Customer Service: The process of ensuring customer satisfaction with a product or
service. Often, customer service takes place while performing a transaction for the
customer, such as making a sale or returning an item. Customer service can take the form
of an in-person interaction, a phone call, self-service systems, or by other means.
RECENT TRENDS IN SUPPLY CHAIN MANAGEMENT
1. Artificial Intelligence and Automation
The use of artificial intelligence (AI) and automation is on the rise in many supply chains.
Automation allows you to streamline repetitive tasks, while AI — which attempts to mimic
human intelligence and “learn” — can assist with more complex, challenging tasks.
2. Increased Focus on Sustainability
As a growing number of consumers prioritize the environment, more businesses have increased
their sustainability efforts, which are now seeping into the supply chain. Because there are so
many different opportunities to focus on sustainability, you’ll need to tailor your efforts to suit
the unique needs of your organization.
3. Customization
You can expect to see an increasing level of customization in different parts of the supply chain.
You may have to segment your supply chain, building a customized strategy and approach for
each segment.
4. The Internet of Things
The Internet of Things (IoT) is a network of physical objects that, powered by sensors and
software, are connected to the internet. The IoT already plays a significant role in the supply
chain, particularly when it comes to logistics, but with increasingly diverse applications, it will
likely continue to grow in importance. In just a few short years, 50% of large companies could
be using IoT and other advanced technologies to support supply chain operations.
5. Digitization
Digitization refers to the practice of putting information into a digital format. When it comes to
securing the future of the supply chain, digitization is non-negotiable. Experts believe that
effective digitization can make your entire supply chain more streamlined, mobile, and dynamic
— all of which are highly beneficial for your organization’s bottom line.

Mr.Chethan.S
Mr.Chethan.S
Mr.Chethan.S
6. Strengthened Relationships
Technology is a significant force in supply chain management, but so are the humans wielding it.
There’s a lot of emphasis on beating your competitors in business, but everyone can enjoy more
success by working together. You will need to focus on fortifying your relationships with your
team members, vendors, and suppliers to increase collaboration and cooperation at each step in
the supply chain.
7. Risk Management and Resiliency
In an increasingly volatile and unpredictable world, the supply chain is constantly at risk of
disruption. You cannot control the weather, predict political events, or foresee the effects of an
unprecedented pandemic — but you can control how your supply chain prepares for and
responds to these threats.
8. Increased Visibility
Few things are as important for supply chain management as visibility and transparency.
Increased visibility will help you understand the state of your supply chain as a whole, as well as
at each link, no matter what kind of volatility threatens your organization.
9. Circular Supply Chain
Traditionally, supply chains have been thought of as linear: starting as raw materials, goods flow
in a straight line through the supply chain until they are a finished, disposable product. Now,
more people subscribe to the idea of a circular supply chain, wherein raw materials, and even
discarded products, are recycled and re-introduced into the manufacturing process.
10. Cloud-Based Solutions
Similar to digitization, cloud-based software solutions are the way of the future in supply chain
management. Traditional and localized supply chain management solutions won’t cut it. To stay
competitive, you need accurate, agile, and accessible solutions for your organization.
THREE ENABLERS OF SUPPLY CHAIN PERFORMANCE
Three enablers of supply chain performance are very important for managing the firm’s success.
However, managing the supply chain is becoming increasingly complex. Having this, actually,
firms have managed to reduce their logistics costs. Because of innovations of technology, it is
possible to reduce logistics costs.

Mr.Chethan.S
Mr.Chethan.S
Mr.Chethan.S
There are three major enablers. They have helped firms and nations in reducing supply chain
costs. They are –
1. Improvement in communication and IT
At present, computing power has become cheaper than the previous. However, communication
costs also have come down. As a result, it helps firms in coordinating global supply chain in a
cost-effective manner. Besides, firms are using enterprise resource planning systems. This
system helps firms in automating several business functions. It can quickly share various
information with different functions. However, this system changed the nature of information
flow within the organization. It worked along with the internet technology that changed the flow
of information in inter-firm transactions.
In the past, only can large firms can use EDI technology that helpful in integrating partner firms.
But it was really expensive. Now, Small firms can communicate their chain partners using world
wide web technology. Moreover, firms can replace physical inventory by information.
As a result, companies are no longer investing in IT sectors. They are going to re-engineering
their supply chain and other processes. Besides, they are keeping their full capability to replace
physical inventory into information.
2. The emergence of third-party logistics provider
Some firms have been managing their logistics activities internally. But lately, they are realized
that they need to focus on managing core business functions. Thus, they are searching for third-
party logistics service providers for handling their logistics functions. In developed countries,
almost every firm have used outsourced logistics. The third-party logistics service providers
manage them effectively.
In developed markets, global firms would like leading third-party providers. They would go
beyond the traditional role and also play the role of a fourth party logistics company. The fourth
party logistics company can integrate the capabilities, resources, and technology to provide
effective supply chain solutions to its customers.
3. Enhanced inter firms coordination capabilities
No firms can go beyond their capabilities. Successful coordination is needed to manage a global
network of companies. International companies like Nike, Apple, and Toyota have successfully
managed complex networks. They played the part of the strategic center and have emerged as
role models of other companies. Each company is focused on core competencies. Consequently,
supply chains become more effective and responsive.
However, there are some failures because of lack of a partner’s interest along with firms. As a
result, the network may not function effectively. But a better understanding and coordination
issues would greatly in diffusing the third party supply chain revolution across all industries.

Mr.Chethan.S
Mr.Chethan.S
Mr.Chethan.S
SUPPLY CHAIN TECHNOLOGY TRENDS
• Artificial Intelligence - Automate processes, Demand Forecasting, Production Planning
and Predictive Maintenance
• Advanced Analytics - Predictive analysis, Prescriptive analytics, optimizing sourcing
and logistics, Managing volatility and Forecasting and visibility
• Internet of Things - Procurement Tracking, Inventory Tracking, Delivery Tracking,
Usage Tracking, Plant Maintenance, Feedback & Support
• Robotic Process Automation - Automated Production and Automate Sales & Purchase
Order Creation
• Autonomous Things - Autonomous vehicles and drones, Inventory Checks, Internal
goods movement and goods Delivery
• Digital Supply Chain Twins - Digital representation of Physical processes & inter
relationships, Used for process optimization and Monitoring,
• Immersive Experience - Use of Augmented & Virtual Reality for product experience,
QR Codes for product information, Mobile Technology for product experience, Feedback
& Support
• Block chain - Product tracking, Order Tracking, Return Tracking, Smart Contracts based
automation, Traceability, Cloud based SCM software and Security
CHALLENGES FACED IN THE SUPPLY CHAIN IN INDIA
1. Material Scarcity.
2. Increasing freight prices.
3. Difficult demand forecasting.
4. Port congestion.
5. Changing consumer attitudes.
6. Digital transformation.
7. Restructuring.
8. Inflation.
IS SUPPLY CHAIN MANAGEMENT AS A MANAGEMENT PHILOSOPHY
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
coordination and collaboration with channel partners, which may be suppliers,
intermediaries, third-party service providers, or customers. Supply-chain management
integrates supply and demand management within and across companies. More recently,
the loosely coupled, self-organizing network of businesses that cooperate to provide
product and service offerings has been called the Extended Enterprise.

Mr.Chethan.S
Mr.Chethan.S
Mr.Chethan.S
A supply chain, as opposed to supply-chain management, is a set of organizations
directly linked by one or more upstream and downstream flows of products, services,
finances, or information from a source to a customer. Supply-chain management is the
management of such a chain.
Supply chain management as an integrative philosophy, directs supply chain members to
focus on developing innovative solutions to create unique and individualized sources of
customer value.
Supply chain management is the management of the flow of goods and services and
includes all processes that transform raw materials into final products. It involves the
active streamlining of a business's supply-side activities to maximize customer value and
gain a competitive advantage in the marketplace.
SUPPLY CHAIN MANAGEMENT – BEST PRACTICES
Key Supply Chain Best Practices
• Innovation is King – Use of modern technologies including, Automation, AI, Machine
Learning & Augmented Reality to improve Supply Chain processes
• Commitment to Reduction in Non-Value-Added Tasks – Automation through
Predictive Analytics, AI & Self-Service which reduce non-value-added tasks
• Invest Only in Needed Inventory – Reduce inventory investments by using an as
needed inventory system to reduce overstocking
• End-to-End Visibility Access – Integrated systems and processes enables end-to-end
visibility across the Supply Chain for quick Decision-Making
Some examples of Supply Chain Best Practices are:
1. Alphabet Inc., California - Use of robotics, machine learning and artificial intelligence
driven systems. Augmented reality is also the way forward for Alphabet with the use of
smart glasses in warehouses for on-screen information and navigation.
2. Amazon.com, Inc., Seattle - Use of highly innovative and technologically advanced
systems like automated warehousing and drone delivery. It also invests heavily in
software systems, warehousing, transportation and invests minimally in raw material and
finished products, which is primarily owned by the direct Sellers
3. Apple Inc., California - Use of advanced software systems and tight inventory control.
Apple has managed the fine balance of complexity and required simplicity through
contract manufacturing, inventory rationalization, supplier base consolidation and
distribution network integration.
4. Intel Corporation - Use of highly integrated and data-driven processes which provides a
quick reporting and decision support system for order management, procurement,
manufacturing, testing and delivery.
5. IBM Corporation - Use of predictive analytics, artificial intelligence and self-service
which reduces non-value-added tasks and frees up time for key personnel in the Supply
Chain to concentrate more on their core activities

Mr.Chethan.S
Mr.Chethan.S
Mr.Chethan.S
6. Microsoft Corporation-Use of business intelligence and predictive insights driven partly
by machine learning. Seamless integration of Supply Chain has enabled it to capture data
on a real-time basis & simultaneously analyze data points and trends.
AUTONOMOUS SUPPLY CHAIN
This autonomous supply chain is a significant element of the Fourth Industrial Revolution. It
might be less mature than other technologies like IoT, but it has enormous potential to create a
competitive advantage for companies and prepare them for the chaotic future.
Where products are manufactured, packed, and loaded using industrial automation and are
shipped by self-driving vehicles or drones to the client.
BENEFITS TO THE AUTONOMOUS SUPPLY CHAIN
• It saves time – it eliminates many cumbersome day-to-day issues, so people can devote
more of their day, and more of their energy, to longer-term and more strategic activity
• It lowers overheads – a frictionless flow of information will lead to improved
inventory and logistics, enabling reductions in working capital
• It increases agility – when information flows freely, supply chain teams can anticipate
and address exceptions more readily, improving overall flexibility and resilience
• It improves customer service –the Nelson Hall survey reports that 98% of its
respondents said supply chain automation was highly important – and they were right.
Intelligent automation reduces exception levels, which not only lowers costs, but also
reduces the need to engage customers in issue resolution. The result: more things
happen without intervention or hassle, so more customers can more often simply make
a decision, click, and move on, secure in the knowledge their order is safely in hand.
********************************

SUPPLY CHAIN AND LOGISTICS MANAGEMENT

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to SUPPLY CHAIN AND LOGISTICS MANAGEMENT

Similar to SUPPLY CHAIN AND LOGISTICS MANAGEMENT (20)

More from Acharya Institute of Graduate Studies

More from Acharya Institute of Graduate Studies (20)

Recently uploaded

Recently uploaded (20)

SUPPLY CHAIN AND LOGISTICS MANAGEMENT