2. SCM Profitability and Quality
Management
A well managed supply chain is able to have its
best practices in:
Demand planning
Procurement
Logistics
Inventory Management
Information systems
Risk Management
3. Effective supply chain managers are able to:
• Strategically procure products and provide
solutions.
• Negotiate contract
• Implement strategies to help the operations
• Manage a global supply chain
4. Why do you need Quality Control?
• To reduce variability
• Boost Customer Satisfaction
• Avoid Legalities
• Reduce Waste
• Cut Costs
5. Importance of Quality and Profitability
Defects and Scrap: If the raw materials are
flawed it increases defects. This may require
extra resources leading to additional
expenditure.
External Failures: Quality control in products is
very important. Poor quality may increase the
returns, lead to early wear ‘n’ tear and also
breakage.
6. Inspections: Larger defects may lead to a
manual inspection causing more financial
burden on the company.
Toxic Materials: The better the company
Handles the toxic materials the better for all the
Internal and the external stakeholders.
7. Profits= Sales Revenue- Total Costs
With increased sales and reduced costs a
company can achieve more profits.
Increased sales can be achieved through:
• Reduced Time to Market.
• Better Quality
• Innovation and design.
• Responsiveness.
8. Lower Costs can be achieved through:
Better asset utilisation
Minimizing downtimes
Lowering the supply chain costs
Better time management.
9. Supply Chain Risk Management
• Supply chain risk management (SCRM) is the
process of taking strategic steps to identify,
assess and lower the risk in your end-to-end
supply chain.
• It include disruptions, supplier bankruptcy,
cyber threats etc.
10. Why do companies struggle to manage risk?
• Supplier base transparency is hard to achieve
• Scale and magnitude of the risks is difficult to
find out.
• Proprietary(ownership) data restrictions.
How to approach Risk Management?
There are 2 types:
Known risks and
Unknown risks
11. Known Risks
• Identifiable and
manageable
• Ex: supplier bankruptcy.
Because history of the
supplier is known,
performance is known and
the impact can be
quantified
• Have a catalogue of risks
and a team to identify and
solve the risks.
Unknown risks
• Very difficult to forsee the
unknown risks.
• Ex: Natural calamaties
• Increasing the speed of
response is crucial.
12. Managing Risks
New Product
Development
Plan Source Make Deliver
Risks in each phase:
Cost and Time, Failed/Poor Quality
Recession, Change in buying behaviour
Quality standards, supply shortfall, supplier bankruptcy
Factory shutdown, process disruption, health and safety
3rd party problems
13. • Indentify the risks
• Build a supply chain risk management
framework:
Impact on the organisation if risk materialises
Likelihood of the risk materialising
organisations preparedness
• Monitor the risks and regular review.
• Emergency preparedness, equipment health,
quality control are also ways of managing
risks.
14. Customisation and Globalisation
• Mass customization is a marketing and
manufacturing technique that combines the
flexibility and personalization of “custom-made”
with the low unit costs associated
with mass production. Mass customization is
giving consumers a unique end product when,
where and how they want it.
• Globalization is the word used to describe the
growing interdependence of the world's
economies, cultures, and populations, brought
about by cross-border trade in goods and
services, technology, and flows of investment,
people, and information.
15. Factors shaping the global environment:
Global Markets: Innovation, Time to market,
customer focused, product life cycle are different
elements of the global markets which shape them.
Technological Forces: Today collaboration between
companies of different countries. Examples can be
the collaboration between GM-Toyota, Ford-Mazda
etc. companies from the US-Japan. This can be seen
even in pharma sector, consumer electronics, auto
and defence sector.
16. • Cost factors: It is not just the delivery speed,
being responsive costs. The production costs,
labour costs, Total quality costs that are
important. It is better to prevent rather than
inspect.
• Political Factors: The stability of the
governments, government policies, currency
stability etc. are very important.
17. Steps to customise the supply chain:
• Define segmentation criteria: By limiting the
amount of combinations of customers,
markets and products that need to be
provided with standardized supply chain
services, economies of scale can be achieved.
• Characterize standard segments: In a second
step, each cluster is characterized individually
in terms of time, costs and quality, to fulfill the
customer needs within the different segments
as much as possible.
18. • Define optional services: In order to increase
customer satisfaction, chosen segments have
to be diversified even more by offering
optional services in addition to standardized
services. Example: Increase quality, Decrease
time etc.
• Prepare implementation: Check the
feasibility, priorities, services, regions before
implementing.
19. Challenges with customisation:
• If the product is standardised, then there is no
choice for the customers. But if there are
customised products, then it is expensive.
20. What should change?
• Rethinking from Centralised to decentralised.
• Prioritise the supply chain demands.
• Reduce the lead time.
• Reduce the raw material waste.
21. Ethical Supply Chain
• An ethical supply chain focuses on the need
for corporate social responsibility, working to
produce products and services in a way that
treats its workers and the
environment ethically
22. Why is it important?
To ensure that there is no malpractice in the
supply chain.
To root out child labour.
To ensure that there is no harm done to the
society and environment.
To have Safe and hygienic working conditions
For Anti-bribery and corruption
For Ethical sourcing and procurement
23. Steps to build an ethical supply chain:
Identify Trustworthy Suppliers
Secure Trading-Partner Relationships and
Digitize Your Supply Chain
Gather Ethical Insights
24. E-Business and The Supply Chain
•Much has been said about the role of supply chain
management (SCM) in e-commerce, yet the effect of e-
commerce on SCM has been just as important.
•According to the U.S. Census, e-commerce sales, as a
component of all retails sales, rose by 13% between 2018
and 2019.
•Because supply chain management and e-commerce are
interconnected, the effect of e-commerce has put many
small businesses in a do-or-die situation: either update your
existing SCM system or become lost in a sea of increasingly
efficient competitors.
25. The Role of E-Commerce in Supply Chains
•The role of e-commerce in SCM is two-fold. First, retailers use e-
commerce to sell directly to clients, either on their own website or
through a service like Amazon or e-Bay.
•Secondly, retailers can buy products and raw materials using e-
commerce systems from manufacturers, wholesalers and
distributors.
•Just like retailers, suppliers can choose to sell directly through
their own websites or through a service like Alibaba or AliExpress.
•While only 25 to 35% of distributors in the U.S. have an e-
commerce component, this is expected to be one of the fastest
areas in growth for e-commerce business in the next few years.
26. E-commerceLogisticsinIndia
$2
billion
Sizeof E-commerce Logistics in2019
Sizeof online retail in Indiain 2018
$18
billion
TopInvestments into E-commerce Logistics Companies
• Delhivery raised $85 million in May from Tiger Global Management, Multiples Alternate
Asset Management, Nexus Venture Partners and Times Internet Limited
• EcomExpressraised $133 Million in Junefrom WarburgPincus
• Snapdeal took aminority stake in GoJavasin March foran undisclosed amount
28. E-commerce is not only about website and
selling products online. It includes suitable
infrastructure, logistics, secure payment
gateways etc.
Manufacturer
/Supplier
Warehouse
Sorting/Pac
king
Parcel Delivery
Center/Local
Depot
Customer
Home/Collect
ion Point
29. The Role of E-Business
E-business is the execution of business transactions via the
internet:
•
•
•
•
•
•
Providing product information.
Placing orders with Suppliers.
Allowing customers to place orders.
Allowing customers to track orders.
Filling and delivering orders to customers.
Receiving payment from Customers.
30. Today, The internet plays a significant role in
many supply chains And companies are using
the internet to conduct a wide variety of Supply
Chain transactions.
31. B2B vs B2C
• Business to Business
commerce. When one
business sells to
another business
rather than to an end
user
• Transactions
between a company
and a consumer.
32. The role of E-business
The Value of e-business will allow
business to create significat value in the
future.
The value however will depend upon the
industry and the stage in the supply chain
a firm occupies.
33. The E-business Framework
• Impact on responsiveness. (which primarly
affects a company’s ability to grow and
protect revenue).
• Impact on efficiency. (which primarily
affects a company’s cost).
34. Impact of E-Business on
Responsiveness
•
•
•
•
•
•
•
•
•
•
Enables a company to gain new revenues or to protect
existing revenues.
Direct Sales to Customers.
24 Hour access from any location.
Wider Product portfolio and Information Aggregation.
Personalization/Customization.
Faster time to Market.
Flexible pricing, product portfolio, and promotions
Price and Service discrimination
Efficient funds Transferr
Lower stockout levels.
Convenience/automated processes
35. Impact of E-business on Cost
• Inventory
• Facilities
• Transportation.
• Information
36. Key Benefits of Supply Chain in E-
commerce
• Increased visibility
• Collaboration
• Reduced costs
• Trade globally
• Enhanced customer service
37. A firm can be successful with e-business only if it can
integrate The interntet with existing channels of
distribution in way that Uses the strenghts of each
appropriately.
38. Doing an assessment will help in forming the
strategies:
How can you spend less on labour, warehousing,
packing etc.
How can you ship to customers in lesser time?
How to improve inventory control?
39. E-business in practice
1. Integrate the Internet with the existing physical
network.
2. Devise shipment pricing strategies that reflect costs.
3. Optimize e-businness logistics to handle packages not
pallets.
4. Design the e-business supply chain to efficiently
handlre returns.
5. Keep Customers informed throughout the order
fullfillment Cycle.
40. Balanced Scorecard and Benchmarking
4 sets of KPI’s linked to the strategic objectives of the organisation.
41. What is Benchmarking?
Measuring the performance of a company
against that of best-in-class.
What is Balanced Scorecard?
The Balanced Scorecard (BSC) is a business
framework used for tracking and managing an
organization’s strategy.
42. Steps in the process of Benchmarking:
Decide what to benchmark
Understand the current performance
Plan(to study Other organisation) on what data
to collect
Study the best in class.
Learn and use the findings.
43. Problem
• High Inventories
• Fresh deliveries of the
products
• JIT System
• Direct Marketing
Compare with
• Amazon
• McDonalds, Dominos
• Toyota Motors
• Dell Computers
45. Performance Measurement
To measure the performance, knowing the KPI’s
is very important.
There are two types:
Qualitative: Customer satisfaction, Product
quality
Quantitative: Order-to-delivery time, Resource
utilisation, delivery performance etc.
In Quantitative there are two types:
Financial: Cost of raw materials, revenue from
goods, transportation costs, cost of goods returned
and damaged goods.
Non Financial: Cycle time, resource utilisation
46. Best Practices in Supply Chain:
• Properly align and staff the supply chain
organization.
• Make technology work for you.
• Establish alliances with key suppliers.
• Optimize company-owned inventory.
• Engage in strategic sourcing.
• Establish appropriate levels of control and
minimize risk.
• Take "green" initiatives and social responsibility
seriously.
