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  3. 3. Definitions <ul><li>“ SUPPLY CHAIN is defined as a set of three or more entities (organizational or individual) directly involved in the upstream and downstream flow of product, services, finances and information from a source to customer” </li></ul>
  4. 4. <ul><li>It is the process of planning and controlling the efficient ,cost-effective flow and storage of raw materials, finished goods and related information from point of origin to point of consumption for the purpose of conforming to customer requirement </li></ul>
  5. 5. . Example: A detergent supply chain: Customer Chemical Manufacturer Manufacturer (P&G) Wal-Mart DC Wal-Mart Store Plastic Producer Tenneco Packaging Paper Manufacturer T imber Industry Oil Industry
  6. 6. Printer Supplier Monitor Supplier Sub- component Supplier Dell Assembly Plant Customer Material Flow Information Flow
  7. 7. Customer Retailer Retailer Retailer Distributor Distributor Distributor Manufactu- rer Manufactu- rer Manufactu- rer Supplier Supplier Supplier Customer Customer Carriers Material Information Funds
  8. 8. Goals and Purpose of SCM <ul><li>Supply chain is to maximize the overall value generated </li></ul><ul><li>Reduce uncertainty & risks, inventory, cycle time </li></ul><ul><li>Improve business processes, customer service </li></ul><ul><li>Increased profits & competitiveness </li></ul>
  9. 9. Decision phases in supply chain <ul><li>Supply chain strategy or design </li></ul><ul><li>Supply chain planning </li></ul><ul><li>Supply chain operation </li></ul>
  10. 10. Process view of supply chain <ul><li>Cycle view </li></ul><ul><li>- Customer order cycle </li></ul><ul><ul><li>- Replenishment cycle </li></ul></ul><ul><ul><li>- Manufacturing cycle </li></ul></ul><ul><ul><li>- Procurement cycle </li></ul></ul><ul><li>Push / pull view </li></ul>
  11. 11. Supply chain activities <ul><ul><li>Forecasting demand </li></ul></ul><ul><ul><li>Selecting suppliers </li></ul></ul><ul><ul><li>Ordering material </li></ul></ul><ul><ul><li>Managing inventory </li></ul></ul><ul><ul><li>Scheduling production </li></ul></ul><ul><ul><li>Shipping and delivery </li></ul></ul><ul><ul><li>Organizing information exchange </li></ul></ul>
  12. 12. Selecting a Supplier <ul><li>In selecting a supplier, a number of factors must be analyzed: </li></ul><ul><ul><li>price </li></ul></ul><ul><ul><li>quality </li></ul></ul><ul><ul><li>reliability </li></ul></ul><ul><ul><li>credit terms </li></ul></ul><ul><ul><li>shipping costs. </li></ul></ul>
  13. 13. Forecasting demand <ul><li>Demand planning and sales forecasting is critical function for Manufacturers, distributors, retailers, & other supply chain members </li></ul><ul><li>Effective demand planning and sales forecasting across the supply chain can bring a host of benefits in SCM </li></ul><ul><li>It can help improve labor productivity, reduce the head count, cut inventories, speed up product flow and increase revenues and profits </li></ul><ul><li>Forecasts can be long term , short term or aggregate </li></ul><ul><li>Forecasts methods vary depending on type of Industry vertical </li></ul><ul><li>Accurate forecasts is essential for FMCG type of Industry, while for other types like made to order heavy Engg Industry this is planned with simple techniques </li></ul>
  14. 14. Purchasing and procurement <ul><li>Purchasing: implies the monetary transaction. </li></ul><ul><li>Procurement: the responsibility for acquiring the goods and services the organization needs: </li></ul><ul><ul><li>goods: </li></ul></ul><ul><ul><ul><li>raw materials </li></ul></ul></ul><ul><ul><ul><li>production parts </li></ul></ul></ul><ul><ul><ul><li>maintenance, repair and operating supplies (MRO) </li></ul></ul></ul><ul><ul><li>services: </li></ul></ul><ul><ul><ul><li>consulting services </li></ul></ul></ul><ul><ul><ul><li>utilities </li></ul></ul></ul><ul><ul><ul><li>workers health care benefits </li></ul></ul></ul>
  15. 15. Production planning and control <ul><ul><li>Number of units of a specific product to be produced </li></ul></ul><ul><ul><li>Time intervals over which production will occur </li></ul></ul><ul><ul><li>Availability of equipment, materials and work force </li></ul></ul><ul><ul><li>Cost effective inventory and resource management. </li></ul></ul>
  16. 16. Material Handling <ul><ul><li>Moving of goods between incoming transport, storage, processes and outgoing transport </li></ul></ul><ul><ul><li>The set of activities that move production inputs and other goods within plants, warehouses and transportation terminals. </li></ul></ul><ul><ul><li>The task for the materials handling manager is to find the methods, the routes, the layouts and the right components to minimize handling. </li></ul></ul>
  17. 17. Inventory management <ul><li>Objectives of inventory management: </li></ul><ul><ul><li>minimize costs: </li></ul></ul><ul><ul><ul><li>working capital </li></ul></ul></ul><ul><ul><ul><li>carrying costs </li></ul></ul></ul><ul><ul><ul><li>scrap and rework </li></ul></ul></ul><ul><ul><li>highest level of customer service. </li></ul></ul><ul><li>Inventory management tasks: </li></ul><ul><ul><li>make decisions about: </li></ul></ul><ul><ul><ul><li>safety stock </li></ul></ul></ul><ul><ul><ul><li>replenishment production runs </li></ul></ul></ul><ul><ul><ul><li>excess stock. </li></ul></ul></ul>
  18. 18. Inventory management continued.. <ul><li>Inventory must be managed differently for: </li></ul><ul><ul><li>independent demand: influenced by market conditions </li></ul></ul><ul><ul><li>dependent demand: derived from the production of parent items. </li></ul></ul> A B C D E Independent demand Dependent demand
  19. 19. Distribution <ul><li>Distribution is the activity that is concerned with receiving parts or finished goods, storing them until they are required and then delivering them to the customer. </li></ul><ul><li>Functions of distribution: </li></ul><ul><ul><li>inventory management </li></ul></ul><ul><ul><li>order processing </li></ul></ul><ul><ul><li>warehousing: </li></ul></ul><ul><ul><li>materials handling </li></ul></ul><ul><ul><li>Transportation </li></ul></ul><ul><li>Methods of transport: </li></ul><ul><ul><li>trucks </li></ul></ul><ul><ul><li>railroads </li></ul></ul><ul><ul><li>water </li></ul></ul><ul><ul><li>airways </li></ul></ul><ul><ul><li>pipelines </li></ul></ul>
  20. 20. Customer service <ul><li>Customer service issues include: </li></ul><ul><ul><li>accurate understanding of customer’s needs and wants </li></ul></ul><ul><ul><li>the ability to deliver necessary customer service levels </li></ul></ul><ul><ul><li>variations between plans and their actual implementation </li></ul></ul><ul><ul><li>effective communications with the customer’s </li></ul></ul>
  21. 21. Key Issues in Supply Chain Mgt. <ul><li>Supply Chain Integration and Strategic Partnering – information sharing and operational planning are keys to successfully integrated supply chain. But what info. will be shared? How will it be used? What level of integration is needed? What partnerships can be implemented? </li></ul>
  22. 22. Key Issues in Supply Chain Mgt. <ul><li>Customer Value – the measure of a company’s performance to its customer, based upon the entire range of products, services, and intangibles that constitute the company’s offerings. Effective supply chain mgt. is critical if company’s objective is to fulfill the ultimate consumer needs and provide value. </li></ul>
  23. 23. Key Issues in Supply Chain Mgt. <ul><li>Information Technology and Decision-Support Systems – much of the current interest in supply chain mgt. is motivated by the opportunities that appeared due to the abundance of data and the savings that can be achieved by sophisticated analysis of these data. </li></ul>
  24. 24. Supply chain best practices <ul><li>Retain only core work (products, services & solutions) </li></ul><ul><li>Improve Supplier Selection process </li></ul><ul><li>Reduce the number of suppliers </li></ul><ul><li>Improve demand forecast accuracy </li></ul><ul><li>Increase inventory turns (velocity) </li></ul><ul><li>Decrease outsourcing costs per/unit by leveraging major suppliers for lower prices </li></ul><ul><li>Increase standardization of products, as much as possible and appropriate </li></ul><ul><li>Increase global sourcing, especially in geographic areas of lower labor costs </li></ul><ul><li>Maximize economies of scale </li></ul><ul><li>Seek global demand for products & services </li></ul><ul><li>Increase automation and database integration between business partners using Enterprise Resource Planning (ERP) software tools and web-based trade exchanges. </li></ul><ul><li>Use technology tools to increase speed to market, reduce costs, and obtain real-time accurate information. </li></ul>