Supply Chain Management (SCM) is the process of managing the flow of goods and services to and from a business. It encompasses every step involved in turning raw materials and components into final products and delivering them to the ultimate customer.
1. K S SCHOOL OF ENGINEERING & MANAGEMENT
Department of Mechanical Engineering
SUPPLY CHAIN MANAGEMENT(18ME653)
Module-1
‘INTRODUCTION TO SUPPLY CHAIN MANAGEMENT ’
2. Supply Chain Management
• Supply chain management(SCM) is the management of the flow of goods
and services and includes all processes that transform raw materials into
final products.
OR
• Supply chain management (SCM) is the optimization of a product's creation
and flow from raw material sourcing to production, logistics and delivery to
the final customer.
• It involves the active streamlining of a business's supply-side activities to
maximize customer value and gain a competitive advantage in the
marketplace.
• https://www.youtube.com/watch?v=lZPO5RclZEo
7. Major Phases of SCM Evolution
• The First Revolution (1910-1920): The Ford Supply Chain
• The Second Revolution (1960-1970): The Toyota Supply Chain
• The Third Revolution (1995-2000): The Dell Supply Chain
8. The Ford Supply Chain (1910-20)
• Tight Integrated chain
• Owned every part of the chain right from timber to rail.
• From mines(iron ore) to Car it took 81 hours to produce the product.
• Only one color (black) and T model.
• Major Drawback-Inflexible Supply Chain, No Variety
10. The Toyota Supply Chain (1960-70)
• To deal with Variety and meet the Demand with efficiency, the Toyota
introduced this Supply Chain System.
• Major Components and Final Assembly done inhouse and other
components are outsourced.
• This leads to Low Set up Time and Production Rate Increased with
flexible Line (Lean Manufacturing)
• Long term relationship with suppliers.
• Disadvantage-Supplier Relationship is permanent
12. The Dell Supply Chain (1995-200)
• As the advancement in IT field enables the customer to customize the
products.
• Product variety with quick delivery of goods & services was achieved.
• No long term relationship with suppliers.
• Follows the trends in Technology.
• Adoptable suppliers for better responsiveness.
19. Importance of SCM
1. Proliferation in Product Lines
2. Shorter Product Life Cycle
3. Higher Level of Outsourcing
4. Shift in Power Structure
5. Globalization of
Manufacturing
20. SCM Boosts Customer Service
• Customers expect the correct product assortment
and quantity to be delivered.
• Customers expect products to be available at the
right location
• Customers expect products to be delivered on
time
• Right After Sale Support
Reduce Operating Costs
• Decreases Purchasing Cost
• Decreases Production Cost
• Decreases Total Supply Chain Cost
Improve Financial Position
• Increases Profit Leverage
• Decreases Fixed Assets
• Increases Cash Flow
21. Process Views of Supply Chain
A typical supply chain may involve a variety of stages, including the
following:
• Customers
• Retailers
• Wholesalers/distributors
• Manufacturers
• Component/raw material suppliers
27. Enablers of Supply Chain
1. Organization Infrastructure
2. Information Technology
3. Strategic Alliances
4. HRM
28. Drivers of SCM
1. Production
2. Inventory
3. Location
4. Transportation
5. Information
29. Supplier Chain Strategy
• Supply Chain Provides superior value to the end Customer in an
efficient manner.
• Customer want more variety ,quick service @ low cost
• Eg: Pizza company delivers pizzas in 40 mins wants to deliver in 20
mins .Thus the cost increases.
Low cost low service & vice versa
Not Possible to provide higher service @low cost & vice versa
30. Customer Service -4 Dimensions
1. Order Delivery Lead Time
2. Responsiveness
3. Delivery Reliability
4. Product Variety
31. Order Delivery Lead Time
• Time taken by supply chain to complete all activities from order to
delivery
• OPP-Order Penetration Point gives the type of supply chain;
1. MTS-Make to Stock
2. MTO-Make to Order
3. CTO-Configure to Order
32.
33. Responsiveness
• The ability to handle the
uncertainty in the market
demand.
• Based on the above ,the
products are classified into
1. Functional Products-
Groceries….etc.
2. Innovative Products-Fashion
Apparels, Technologies…etc.
38. SCM Performance Measures
• The SCOR model defines a supply chain as being composed of
five main integrated processes:
Plan, Source, Make, Deliver and Return.
• Performance of most processes is measured from 5
perspectives:
Reliability, Responsiveness, Flexibility, Cost and Asset
39. SCM Performance Measures
• As per SCOR( Supply Chain Operations Reference) performance
measure falls under 4 major categories
1. Cost
2. Asset
3. Reliability
4. Flexibility
