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1. Supply Chain Management Concept
Module I

2. BUSINESS ENVIRONMENT TODAY
 Liberalised & Speeding Towards Globalisation
 Revolutionary Changes in Technology
 Short Product Life-cycles
 Shift in Manufacturing/ Dealer Relationship
 Mounting Pressures from
• Consumer Groups
• Environmentalists

3. BUSINESS COMPLEXITY- 4Cs
Customers
Market
Trends
External Environment
Company
Competition
Complexity
-Simplest Ideas exploited first
-`Barriers to Entry` increasing
- Technology Rates rising
Completeness
Move to Integrate
Solutions, not just
Products or Services
Customer Focus
New Standards emerging
- Requirements of Products
and Services and Flexibility
Competitiveness
-Reduced Monopolies
on technology
-Work can be done
almost anywhere
-Time and Quality
are competitive
resources

4. PLAN FOR CHANGE
 Create Plans to Manage both Long/ Short
Term Changes
Create Supply Chain Management Company
 Responsive & Agile Systems & Institutions
 Manage ‘Change’ to Company’s Advantage

6. RELAY RACE

7. 3 MAJOR REASONS FOR FAILURE
 Participant’s Objectives -
 Goals at Change-over Points -
 Participants Busy Improving
Own Performance
NO ONE FOR OVERALL
SUCCESS
CONFLICTING
DIFFERENT

8. Purchase
Material Flow
Material
Control
Production Distribution
Customer Service
Sales
FUNCTIONAL ORGANIZATION
Baton -
Each Function has Own Goals
Material/ Goods/ Information

9. 2 HUNTERS & A TIGER
Faster than You

10. FLOWS IN FUNCTIONAL ORGANIZATION
C
U
S
T
O
M
E
R
S
Marketing
Assembly
Transmission
Purchase
S
U
P
P
L
I
E
R
S
Information 1
Order
Modified Order
Information 2
Information 3
Information 4
Information C
Information S
Breaks in Information Flow
Arms Length Arms Length

11. FLOWS IN SUPPLY CHAIN ORGANIZATION
C
U
S
T
O
M
E
R
S
S
U
P
P
L
I
E
R
S
Material Flow
Information Flow
Customer Order
Fund Flow
Seamless Information Flow
Purchase Transmission Assembly Marketing

12. All MOVEMENT activities
in
SUPPLY CHAIN
is considered a
‘SINGLE ENTITY’
and constitutes a
TOTAL SYSTEM
SUPPLY CHAIN MANAGEMENT CONCEPT
SINGLE ENTITY

13. SUPPLY CHAIN AS A NETWORK
Suppliers
Customers
Company

14.  Single Entity Responsible for Planning, Executing &
Control of the 3 Flows
SUPPLY CHAIN MANAGEMENT
> Material
> Related Information
> Funds
Fundamentals
 Systems Approach in integrated Supply Chain
> Information & Material - Complementary
> Any Change in Conditions in One Affects All in
Supply Chain

15. SUPPLY CHAIN MANAGEMENT
 Changed Perspective on Inventory
> Reduce Inventory to identify Process Constraints
> Minimize Buffer with Improved Process Control
> Replace Inventory with Information
 Operational to Strategic Decisions
> Transaction-based Purchase to Long-term Contracts
> Investment in Upgrading Vendor to Strategic Partner
Fundamentals
> Location & Capacity of Production/ Warehousing Facilities
> Modes of Transportation
> Type of Information System to be Used

16. SUPPLY CHAIN MANAGEMENT
 Focus on Core Competencies
> Outsource All other Activities
Fundamentals
> In-source CORE COMPETENCIES
 Responsiveness OR Efficiency in SC Achieved
Through Decisions on 4 Performance Drivers
> Inventory
> Transportation
> Operating Facilities
> Information

17. CHARACTERISTICS
 Process Oriented Horizontal Organisation built
along the 3 Flows
 Material
 Related Information
 Financial
 Integrated System based working
 All functions work Together to achieve SC targets
 Integrated NOT Individual functions with Interfaces
 Strategic Tasks NOT Operational Responsibilities

18. LOGISTICS INTERFACES
Marketing
Promotion
Product Mix
Pricing
Sales Forecast
Customer Service
Order Processing
Product Forecast
Packaging
Warehouse Locations
Parts & Service Support
Manufacturing
Aggregate Planning
Production
Plant Design & Layout
Job Design
Quality Control
Production Control
Production Scheduling
Plant Warehouse
Purchasing
Communication
Inventory Control
Operating Budget &
Control
Capital Budgeting &
Control
Plant & machinery
Finance
Warehousing & Storage
Material Handling
Transportation
Supply Chain
Logistics

19. INTEGRATED SUPPLY CHAIN MANAGEMENT
2
tier
Suppliers
1 tier
Suppliers
Procurement Transmission Assembly BSR Depots
Customers
COMPANY
Material Flows
Information Flows
Financial Flows
Inbound
Logistics
Outbound
Logistics
External
Supply Chain
Managing the Flows Most Profitably
Dealers
External
Supply Chain
In-plant Logistics
Internal
Supply Chain

20. PLANNING and MANAGEMENT of all activities related
to Sourcing, Procurement, Conversion, Logistics and
Distribution to Ensure SEAMLESS FLOW of Goods,
associated Information and Funds within and across
Companies through System Integration, Coordination
and Collaboration for SUSTAINABLE Competitive
Advantage
SUPPLY CHAIN MANAGEMENT
DEFINITION
Supply Chain Management Integrates
Supply and Demand Management

21. INTEGRATION IN SUPPLY CHAIN
 Process Integration
• Collaborative Working with Buyer and Seller
• Joint Product Development
• Common Systems
• Shared Information
Focus on Processes, Supplier and Customer
Chains that Enhance Competitiveness
 System Integration
• Suitable ERP system
 Integration of Extended Supply Chain Critical
for Organisational Success

22. CONFLICTING GOALS IN SC MANAGEMENT
• Low Material Cost
• Low Costs of Logistics
• Low Overheads
• Low level of
Tied-up Capital
in Inventories
• Low Inventory
Carrying
Costs
High
Level of Service
Towards
Markets and
Production
Supply Chain
Management

23. JUGGLING LOGISTICS MIX
 Inventory
 Facilities
 Communication (IT)
 Unitisation (Packaging)
 Transportation
 Materials Management
 Production Scheduling
Success Through Controlled Trade-Offs

24. TRADE - OFFS IN SC MANAGEMENT
 Lot Size – Inventory
 Inventory – Transportation Cost
 Lead Time – Transportation Cost
 Product Variety – Inventory Cost
 Warehousing – Transportation Cost
 Cost – Customer Service
Advanced IT & Creative Network Design
Reduce Impact of Trade- Offs

25. Critical Success Factors
In
Supply Chain Management
 Integration
 Coordination
 Collaboration
ICC
 Integrated Information System
 System + Communication
 Management Agreements
+
Commitment from ALL

26. BENEFITS TO THE COMPANY
 Improved CUSTOMER SERVICE
 Reduction in TIED-UP CAPITAL
 Reduction in ADMINISTRATIVE COSTS
 Sharper COMPETITIVE EDGE
 Sustained GROWTH
 Increased SHAREHOLDER VALUE

27. EFFECTS ON THE ORGANIZATION
 More Competitive
 Lean Growth Oriented
 Increased Shareholder Value

28. SUPPLY CHAIN ACTIVITIES ARE FOCUSSED
ON
PARAMETERS OF CUSTOMER SERVICE AND
SUPPLY CHAIN ORGANIZATION HAS THE
RESPONSIBILITY, AUTHORITY & COMPETENCE
TO
MANAGE THE 3 FLOWS IN THE BEST INTEREST
OF
THE WHOLE COMPANY
IN ESSENCE

29. RELAY RACE

30. THE BOAT RACE
Seamless Integration
One Objective
Single Entity