23. Supply Chain Management
Reliability:
Shipment plan = 150 Order
On-time ex-factory = 120 Order
So, Reliability = 120/150= 80%
Flexibility:
Plan date = 10th March
Buyer request = 7th March
If ex-factory 7th Mar = Flexible
If ex-factory 10th Mar = Reliable
If ex-factory Delay = Not Reliable
OTIF (On Time In Full quantity):
Out of 150 orders 120 is on time
100 orders in full quantity
20 orders in short shipment
So, OTIF = 100/150 = 66%
39. Supply Chain Management
The difference between a value chain and a supply chain is that a supply chain is
the process of all parties involved in fulfilling a customer request, while a value chain
is a set of interrelated activities a company uses to create a competitive advantage.
Ex: Like fruits transfers to farmers then wholesaler then retailer then customer but in
value chain we add some values like grading then sorting then packaging then cool
and storing etc
40. Supply Chain Management
Cash to cash cycle time
Cash to cash cycle time= DIO+DSO-DPO
Where,
DIO= Days Inventory Outstandings
DSO= Days Sales Outstandings
DPO= Days Payable Outstandings
Example:- The inventory held by a business average being on hand for 40 days,
and its customers usually pay within 50 days. Offsetting these figures is an average
payable period of 30 days. This results in the following cash to cash duration.
Cash to cash days= 40+50-30=60 cash to cash days
This outcomes states that a business must support its expenditures for a period of
60 days
42. Supply Chain Management
SCOR
SCOR Framework
The Supply Chain Operations Reference model (SCOR) is the world’s leading supply chain
framework, linking business processes, performance metrics, practices and people skills into a unified
structure.
Employ the SCOR framework at your organization and:
● Increase the speed of system implementations
● Support organizational learning goals
● Improve inventory turns
44. Supply Chain Management
SCOR
Level 1 Metrics included in SCOR:
● Perfect order fulfillment
● Order fulfillment cycle time
● Upside supply chain flexibility
● Upside supply chain adaptability
● Downside supply chain adaptability
● Overall value at risk
● Total cost to serve
● Cash-to-cash cycle time
● Return on supply chain fixed assets
● Return on working capital
45. Supply Chain Management
Just in time (JIT) investment system
Just in time inventory system is one of the recently development inventory management
concepts, which assumes that the purchase of inventory has to be just in time of use. Jit
refers to process of acquiring material (inventory) as they are needed. Jit reduces
inventory by purchasing and storing lower quantities of inventories as much as possible.
The objective of jit is to maintain inventory as low as possible. Sometimes, it may even
be at zero level. Thus, under jit, the inventories are received in time or purchased in
time of use. It is only possible when the supplier can be relied from making the delivery
of goods on time without compromising the quality. Generally, in developed countries
where communication and transportation system are very efficient, the use of jit is
common.
Advantages
The advantages of JIT are as follows.
a. Just in time inventory system reduces the amount of money tied up in inventory of
raw material and finished goods.
b. This systems creates saving of space.
c. It does not required maintaining large inventory storage facilities.
d. Just in time inventory systems minimizes wastage.
e. It helps to improve the labor efficiency.
46. Supply Chain Management
Just in time (JIT) investment system
Disadvantages
The disadvantages
a. The effectiveness of this system depends on the co-operation and faith with the
supplier.
b. This systems works well when there is proper knowledge of quality and quantity of
materials needed.
c. There must be some alternative suppliers as the regular suppliers may not be able to
dispatch the material all the times.
47. Supply Chain Management
Perpetual inventory system
Meaning of perpetual inventory system
The perpetual inventory system is the way of maintaining the record of inventory in
such a ways that the stock on hand can be ascertained at any time. It emphasizes the
day to day checking of stock and maintains the up to date record. It is a method of
recording inventory after every receipt and issue to facilitate regular checking and
obviate the stocking. It provides the per
48. Supply Chain Management
What is Value added?
The value added is the difference between sales revenue and purchase price of the
products and series. It is ascertained by deducting cost of purchase form sales
revenues. In the processes of conversion of raw materials into finished product, it is
required to add value or utility inform of profit. So, sales price of the product is higher
that cost. The excess of market value over the cost of material/input is known as value
added.
If a manufacturing produces goods for Rs 100 and sell of Rs 150, the difference of Rs 50
is the value added. Similarly, if the same goods are sold to the retailer for Rs180, the
value added is Rs30. As such the same goods are sold to the customers for Rs200, the
value added is Rs20. Hence, the total value added becomes Rs100 (Rs50+Rs30+Rs20
or Rs200- Rs100). Therefore value added is the wealth or utility in the product of the
business that a firm creates by its own effort.
Value added= sales revenue and other incomes – cost of budget-in-materials
and services.
Cost of bought-in-includes to cost of materials purchase for consumption and cost of
services includes the cost of services paid for external agencies for using the facilities.
