SIM Unit 5: Supply Chain Management (SCM): Concept , Components, Hospital supply chain management, Global competitive scenario. Purchase , Purchase Order

1. • Supply Chain
Management (SCM):
• Concept ,
• Components,
• Hospital supply
chain management,
• Global competitive
scenario.
• Purchase ,
• Purchase Order

2. SUPPLY CHAIN MANAGEMENT (SCM)
• SCM involves a series of key activities and processes that must
be completed in an efficient (fuel-conserving, cost-reducing,
etc.) and timely manner
• Supply chain management (SCM) is the active management of
supply chain activities to maximize customer value and achieve a
sustainable competitive advantage. It represents a conscious
effort by the supply chain firms to develop and run supply
chains in the most effective & efficient ways possible. Supply
chain activities cover everything from product development,
sourcing, production, and logistics, as well as the information
systems needed to coordinate these activities.

3. THE CONCEPT
The concept of Supply Chain Management (SCM) is based on two core
ideas:
• The first is that practically every
product that reaches an end
user represents the cumulative
effort of multiple
organizations.
• These organizations are
referred to collectively as the
supply chain.
• The second idea is that while supply
chains have existed for a long time, most
organizations have only paid attention to
what was happening within their “four
walls.” Few businesses understood, much
less managed, the entire chain of activities
that ultimately delivered products to the
final customer.
• The result was disjointed and often
ineffective supply chains.

4. CONTINUED
Physical Flows
• Physical flows involve the transformation, movement, and storage of
goods and materials. They are the most visible piece of the supply chain.
But just as important are information flows.
Information Flows
• Information flows allow the various supply chain partners to coordinate
their long-term plans, and to control the day-to-day flow of goods and
materials up and down the supply chain.

5. COMPONENTS

6. HOSPITAL SUPPLY CHAIN MANAGEMENT

7. GLOBAL COMPETITIVE SCENARIO
SIX KEY TRENDS:
• In the government set-up though the basic objective, is not
maximization of profit, but the social economic development of people.
Even, if the objectives of these two mutually exclusive categories of
enterprises are different, they share some features: that is satisfying the
end consumer(s) by providing the right product, in right condition at the
right time to fulfill the social obligation towards society and the optimum
allocation of limited resources.
From our experience, observing the trends of some key companies in food
and beverage, consumer products, high tech and industrial manufacturing,
there are six key trends causing significant impact and change to supply
chain design and performance.
They are demand planning, globalization, increased competition and price
pressures, out-sourcing, shortened and more complex product life cycles,
and closer integration and collaboration with suppliers.

8. CONT…
• In the first place demand planning- as sources
and capacities for manufacturing have
increased, more companies have moved away
from focusing efforts on plant-level
production planning and are adopting more
of a demand driven focus of trying to
influence and manage demand more
efficiently. Advanced demand planning
systems and proper strategies can also help
uncover data and identify trends buried in a
company's information systems.
• In the second place sequel to globalization
largely due to improvements in
communications, globalization is dramatically
impacting the way business is managed and
transacted, even on the most local levels. No
area of a business is affected more by the
trend to a global business environment than
the supply chain. Manufacturing, distribution,
sourcing of materials, invoicing and returns
have all been significantly impacted by the
increased integration of a global customer and
supplier base, and many companies find that
existing processes and technology are not
flexible enough for this new business
environment.

9. CONT…
• In the third place due to increased
competition and price pressures, continued
commoditization of many products,
companies need better ways to distinguish
themselves. In one case, a large global
consumer goods manufacturer saw prices
around some of its commodity products
drop as much as 60-80 percent. Product
innovation and brand equity no longer were
allowing them to command a higher price in
the market. In order to continue to compete
with that commoditized product they made
significant cost Improvements with supply
chain re-design and technology.
• In the fourth place owing to outsourcing
some realize that outsourcing parts or all of
a supply chain can be advantageous. With
marketplace improvements around
• (1) information media and systems
• (2) cost and quality of global manufacturing
and distribution, and
• (3) product design capabilities, companies are
gaining additional synergies by outsourcing all
or parts of their supply chain.

10. CONT…
• In fifth place where shortened and more complex
product life cycles many MNCs, TNCs, IBCs, are under
pressure to develop innovative products and bring
them to market more rapidly, while minimizing
cannibalization of existing products, which are still in
high demand. In order to meet the needs of both
customers and consumers, companies need more
efficient product lifecycle management processes.
This includes heavy emphasis on managing new
product introduction, product discontinuation, design
for manufacturability and leveraging across their
entire product and infrastructure characteristics.
• In sixth place due to circumstantial collation many
corporates are moving towards more intense
collaboration between stakeholders' customers and
suppliers for extended supply chain. The level of
collaboration goes beyond linking information
systems to fully integrating business processes and
organization structures across companies that
comprise the full value chain. The ultimate goal of
collaboration is to increase visibility throughout the
value chain in an effort to make better management
decisions and to ultimately decrease value chain
costs. With the right tools, processes and
organizational structure in place, collaboration
provides key people throughout the value chain with
the information needed to make business-critical
decisions with the best available information.

11. PURCHASE
The purchasing process
• Purchasing is a subset of procurement. Purchasing
generally refers simply to buying goods or services.
Purchasing often includes receiving and payment as
well.
• Unlike the entire Procure-To-Pay Cycle, the steps
explicitly related to purchasing should not be tailored
to suit the size and scope of each individual business.
These are fundamental steps of good purchasing and
should be employed routinely as a best practice in all
businesses.

12. PURCHASE ORDER
• A purchase order (PO) is a commercial document and first
official offer issued by a buyer to a seller, indicating types,
quantities, and agreed prices for products or services. It is
used to control the purchasing of products and services
from external suppliers.
• The issue of a purchase order does not initiate a contract. If
no prior contract exists, then it is the acceptance of the
order by the seller that forms a contract between the buyer
and seller. Purchase orders can be an essential part of ERP
system orders.

13. LEGAL
(PO)
• Although a typical purchase order may not contain contract
language (in fact most contain little more than a list of the goods
or services the buyer desires to purchase, along with price,
payment terms, and shipping instructions), the purchase order is
a specially regarded instrument regulated by the Uniform
Commercial Code or other similar law which establishes a
purchase order as a contract by its nature. Yet despite the nature
of the purchase order as a contract, it is common to accompany
the acceptance of a purchase order with a legal document such
as the terms & conditions of sale, which establish specific or
additional legal conditions of the contract.
• The US Federal Acquisition Regulation states that purchase
orders should generally be issued on a fixed-price basis, but
provision is also made for unpriced purchase orders to be issued
where "it is impractical to obtain pricing in advance of issuance
of the purchase order"