Supply chain management in Operations and Production Management

2. Operations and Production Management

3. Maryam Fayyaz
MC15236

4. Maam Zofishan Sehgal
Presented to:

5. Presented by:
Name Roll #
Maryam Fayyaz MC15236
Neelam Javed MC15201
Memoona Maqsood MC15218
Tehmina Kousar MC15205

6. Supply Chain Management
Operations and Production Management

7. What is a Supply Chain
All activities associated with the flow and transformation of
goods from raw materials to end users.
The term supply chain refers to the entire network of companies
that work together to design, produce, deliver, and service
products.
A network of facilities including:
I. Material flow from suppliers and their “upstream” suppliers at
all levels,
II. Transformation of materials into semi-finished and finished
products (internal process)
III. Distribution of products to customers and their “downstream”
customers at all levels .

8. Simplified Model:

9. To understand upstream and downstream:

11. Three flows in SC:
There are three kinds of flows in a supply chain:
material , information , capital.
Downstream
Material: Products, Parts
Information: Capacity, Delivery Schedules
Finance: Invoices, Pricing, Credit Terms
Downstream:or downstream the supply chain. The direction in which materials flow, e.g. a
customer will always be downstream from its suppliers.

12. Cont’
Upstream
Material: Returns, Repairs, After-sales Services
Information: Orders, Point-of-sale Data
Finance: Payments
Upstream:or upstream the supply chain, the direction in a supply chain opposite to the
flow of materials, e.g. a supplier will always be upstream from its customers.

13. Model:

14. Major concepts of SC:
Order fulfilment: Deliver right order on time
Front office operations: order taking, advertisement, CRM
Back office operations: Accounting, finance, inventor,
packaging, logistics
Logistics: Managing the flow of goods, information and money
along the supply chain

15. Model:

16. Problems along the Supply Chain:
Delays in production, distribution etc.
Expensive Inventories
Lack of partners’ coordination
Uncertainties in deliveries
Poor demand forecast
Interference with production
Poor quality

17. Supply chain management:
A set of processes and sub-processes which attempt to implement and
optimize the functions, connected entities, and interacting elements of a
supply chain.
Involves:
Organizations, procedures, people.
Activities: Purchasing, delivery, packaging, checking, warehousing, etc.
 Establishment of long-term relationships with suppliers (supply alliances)
and distributors
Effective flow of information through the supply chain

19. Neelam Javed
MC15201

20. Objectives of supply chain management
Service Orientation.
System Orientation.
Competitiveness and Efficiency.
Minimizing the Time.
Minimizing Work in Progress.
Improving visibility Demand.
Improving Quality.
Reduces Transportation Cost.
Reduces Warehousing Cost.

21. Functions of supply chain management
Strategic level
Tactical level
Operations level

23. Strategic level
Strategic network optimization, including the number, location, and size of
warehousing, distribution centers, and facilities.
Strategic partnerships with suppliers, distributors, and customers, creating
communication channels for critical information and operational improvements
such as cross docking, direct shipping, and third-party logistics.
Product life cycle management, so that new and existing products can be optimally
integrated into the supply chain and capacity management activities.
Information technology chain operations.
Where-to-make and make-buy decisions.
Aligning overall organizational strategy with supply strategy.
It is for long term and needs resource commitment.

24. Tactical level:
Sourcing contracts and other purchasing decisions.
Production decisions, including contracting, scheduling, and planning
process definition.
Inventory decisions, including quantity, location, and quality of
inventory.
Transportation strategy, including frequency, routes, and contracting.
Benchmarking of all operations against competitors and
implementation of best practices throughout the enterprise.
Milestone payments.
Focus on customer demand and Habits

25. Operational level:
• Daily production and distribution planning, including all nodes in the supply chain.
• Production scheduling for each manufacturing facility in the supply chain (minute by
minute).
• Demand planning and forecasting, coordinating the demand forecast of all customers and
sharing the forecast with all suppliers.
• Sourcing planning, including current inventory and forecast demand, in collaboration with
all suppliers.
• Production operations, including the consumption of materials and flow of finished goods.
• Outbound operations, including all fulfilment activities, warehousing and transportation to
customers.
• Order promising, accounting for all constraints in the supply chain, including all suppliers,
manufacturing facilities, distribution centers, and other customers.
• From production level to supply level accounting all transit damage cases & arrange to
settlement at customer level by maintaining company loss through insurance company.

26. Importance of Supply Chain Management
Boost Customer Service
Customers expect the correct product assortment and quantity to be delivered.
Customers expect products to be available at the right location.
Right Delivery Time – Customers expect products to be delivered on time.
Example: pizza delivery
Right After Sale Support – Customers expect products to be serviced quickly. (i.e.,
customer satisfaction diminishes when a home furnace stops operating in the winter
and repairs can’t be made for days)

27. Reduce Operating Costs:
Decreases Purchasing Cost – Retailers depend on supply
chains to quickly deliver expensive products to avoid holding
costly inventories in stores any longer than necessary.
For example, plasma HDTV’s
Decreases Production Cost – Manufacturers depend on supply
chains to reliably deliver materials to assembly plants to
avoid material shortages that would shutdown production.

28. Memoona Maqsood
MC15218

29. Improve Financial Position:
Increases Profit Leverage – Firms value supply chain managers because
they help control and reduce supply chain costs. This can result in dramatic
increases in firm profits.
Decreases Fixed Assets – Firms value supply chain managers because they
decrease the use of large fixed assets such as plants, warehouses and
transportation vehicles in the supply chain.
Increases Cash Flow – Firms value supply chain managers because they
speed up product flows to customers. For example, if a firm can make and
deliver a product to a customer in 10 days rather than 70 days, it can invoice
the customer 60 days sooner.

30. Improve Quality of Life:
Foundation for Economic Growth – Societies with a highly developed supply
chain infrastructure are able to exchange many goods between businesses and
consumers quickly and at low cost. As a result, the economy grows.
Job Creation – Supply chain professionals design and operate all of the supply
chains in a society and manage transportation, warehousing, inventory
management, packaging and logistics information.
Improves Standard of Living – Societies with a highly developed supply chain
infrastructure are able to exchange many goods between businesses and
consumers quickly and at low cost. As a result, consumers can afford to buy
more products with their income thereby raising the standard of living in the
society.

31. Advantages of supply chain management :
Supply Chain Management helps to increase savings in labour and procurement costs.
Supply Chain Management helps to achieve better inventory control.
Supply Chain Management is used to get better control over suppliers.
Supply Chain Management can increase market visibility.
Chances of product failure rate can be reduced by Supply Chain Management.
Supply Chain Management is used to provide better information on customer needs,
tastes etc.,
Supply Chain Management helps to achieve regular and better communication with
the customers.
Supply Chain Management helps to improve customer care service.

32. Cont:
Supply Chain Management is used to achieve higher revenues.
Supply Chain Management increases performance and profitability.
Supply Chain Management is used to lower transportation, warehousing
and packaging costs.
Supply Chain Management increases capacity, capability or flexibility.
Supply Chain Management enhance value for money.
Supply Chain Management is used to improve reputation of brand in
market.
Supply Chain Management also increases the value of shareholder.

33. Disadvantages of supply chain management:
Sometimes Supply Chain Management can be very expensive to implement.
Competitors can easily copy the strategy of Supply Chain Management.
For better Supply Chain Management, proper skills and experience is
required to achieve success.
Sometimes in Supply Chain Management various functions may be difficult
to manage.
In Supply Chain Management there may be staff resistance.

34. Tehmina Kouser
MC15205

35. Differences in Supply Chain Designs for a
Manufacturing Industry vs. a Service Industry
Inputs
Both the service and the manufacturing industries require an input of labor to
complete the processing necessary to satisfy their promise to the end customer.
Additionally, companies in both industries require inputs from suppliers of
various types.
The primary difference is that most of the cost of manufacturing labor is
involved in procuring, transporting and manipulating physical material, while
almost

36. Logistics:
Traditional manufacturing supply chain management focuses on
logistics in terms of moving physical material from one location to
another. The size and weight of objects being shipped and the distance
from the supplier to the manufacturing facility can play a major role
in the cost of the product.
In service organizations, particularly in the financial sectors, these
factors are irrelevant because no physical product is moving except
perhaps a few sheets of paper.

37. Finished Goods:
Traditionally, a finished good is a product that has been completely transformed
from a raw material form to a form that is ready to sell to the customer. It's a
physical unit that has been assembled, tested and packaged, and is now sitting
on a shelf at a warehouse or a store, ready to be sold.
In the service industry, a finished good equals a closed file. The loan has been
booked, the home sale has closed, or the class has been completed, leaving no
physical evidence except a few sheets of paper. However, the goal of either
finished product is a customer who is satisfied with the product or service she
paid for.

38. Optimization:
In a manufacturing organization, optimization of the supply chain is
accomplished primarily by improving speed of delivery and reducing
cost. Companies work to reduce physical bottlenecks and inventory,
and negotiate better pricing on raw materials.
In service main drivers of optimization are relationships and
information flow. By building partnerships with companies whose
strengths complement its own, a corporation can reduce costs.So a
service company can realize the same goal as the manufacturing
company: a lower-cost finished product, delivered to the customer
more quickly.

39. Conclusion:
There is a need of effective Supply chain management so that
Supply chain problems can be avoided at all costs as in today’s
dynamic business environment, the rate at which new products
reach the market has increased tremendously. Moreover, due to
competitive pricing and innovative marketing strategies, the
availability of products has to be ensured at the right time at the
right price at locations nearer to the end user.