SCM

1. What is SCM?
 Supply chain management (SCM) is the centralized management of the flow of goods and
services to and from a company
 Includes all the processes involved in transforming raw materials and components into final
products and put them into customers’ hands
 A supply chain consists of manufacturers, suppliers, transporters, warehouses, retailers, and
customers
Process
 Planning:
 Establishing strategies for the efficient management of all resources that meet
customer demand for a product or service.
 Sourcing:
 Selecting suppliers to provide the goods and services needed to create the product.
 Manufacturing:
 Scheduling and executing the production steps, testing for quality, packaging for
shipping, and scheduling for delivery.
 Delivery:
 Coordinating customer orders, scheduling deliveries, dispatching loads, invoicing
customers, and receiving payments.
 Returns:
 Managing defective, excess, or unwanted products.
Stakeholders
 Suppliers
 Role: Provide raw materials or components.
 Importance: Quality and timeliness impact production and costs.
 Manufacturers
 Role: Transform raw materials into finished products.
 Importance: Efficiency affects supply chain's ability to meet demand.
 Warehousing Units
 Role: Store raw materials and finished goods.
 Importance: Crucial for inventory management and reducing lead times.
 Logistics Service Providers
 Role: Handle transportation and overall movement of goods.
 Importance: Ensure timely and cost-effective delivery.
 Retailers
 Role: Sell products to end consumers.
 Importance: Influence consumer demand and supply chain dynamics.
 Customers
 Role: End-users of the products.
 Importance: Demand dictates the supply chain flow.
Challenges in SCM
 High transportation costs
 Optimizing product placement within the warehouse
 Meeting and satisfying customer needs
 Timely pick-up and delivery
 Adapting to the latest technological solutions
 Lack of transparency across the supply chain

2.  Market demand and supply fluctuations
 Managing the complexities of global supply chains
 Adhering to regulations across different regions
 Ensuring eco-friendly practices.
Benefits of optimally doing SCM
 Improved inventory management
 Avoid stockout scenarios, prevent purchase of excess products, plus the added cost
of storing excess inventory
 Better order fulfillment
 Identify faster and efficient transport methods for faster delivery times
 Better customer service
 Fewer returns, lowered customer service cost
 Better visibility of costs
 Analyzing your cost balance of transportation, distribution, and manufacturing will
reveal savings opportunities and operational efficiencies
 Increased productivity
 Enterprise asset management systems and predictive maintenance help machines
and systems run more efficiently.
 Greater supply chain agility and resiliency
 Trends and market shifts can happen suddenly. Resilient SCM systems have the
agility to adapt to any situation. Real-time data and smart insights can help supply
chain managers re-allocate machines and staff into better workflows. Customer
feedback can be heard and acted upon right away. Virtual inventories and smart
warehouse processes keep supply and demand aligned.
 Improved product quality:
 Linking customer feedback directly to R&D teams means that product design and
development are fully informed by customer needs.
Key performance indicators
 Order Accuracy
 Determine the percentage of sales deliveries made on time, percentage of sales
deliveries made correctly and calculate the number of sales ordered that arrived in
perfect condition.
 Cash to Cash Cycle Time
 It shows the number of days it takes between paying for raw materials and getting
paid for the products you sell.
 Materials Payment Date – Customer Order Payment Date
 Customer Order Cycle Time
 It depicts the period between the moment a purchase order is received from the
customer and the moment the order is successfully delivered to the customer.
 Actual Delivery Date – Purchase Order Creation Date
 Fill rate
 It’s represented as a percentage of packages or SKUs successfully shipped on the
first attempt.
 ((Total Number of Items – Number of Shipped Items) / Total Number of Items) *
100
 Inventory Days of Supply
 Inventory days of supply represent the number of days your inventory can sustain
without restocking.
 Inventory on Hand / Average Daily Usage of Inventory

3.  Freight Bill Accuracy
 Shipping your inventory items from factory to warehouse (or from warehouse to the
customer) is integral to smooth logistics operations, and a slight error can harm your
business’ reputation and cash flows.
 (Number of Correct Freight Bills / Total Freight Bills) * 100
 Days Sales Outstanding
 This supply chain KPI reveals how fast you’re collecting payments from customers.
 (Account receivables / Sales) * Days in Period
 Inventory Turnover
 Inventory turnover ratio shows how efficiently you turn the working capital invested
in your inventory into profit.
 Inventory Turnover Ratio = Cost of Goods Sold / {(Opening Stock – Closing Stock) /
2}
 Gross Margin Return on Investment
 It shows the exact amount of money made from a specified amount of inventory
investment.
 GMROI = (Gross Profit) / [(Opening Stock – Closing Stock) / 2] * 100
 Inventory Velocity
 Reveals the percentage of inventory that’s estimated to finish during a given period
 Inventory Velocity = Opening Stock / Next Period’s Sales Forecast
Technology trends shaping the future of SCM
 IoT (Internet of Things) Integration:
 Real-Time Data: IoT devices, such as sensors and RFID tags, are integrated into
supply chain processes to provide real-time data on the location, condition, and
movement of goods.
 Benefits: IoT technology enhances visibility, reduces errors, and supports proactive
decision-making.
 Big Data and Analytics:
 Insights from Vast Data: Big data analytics tools process vast volumes of data from
diverse sources, allowing organizations to extract valuable insights.
 Applications: Predictive analytics helps forecast demand, optimize inventory levels,
and identify potential disruptions.
 Cloud Computing:
 Secure Data Storage and Collaboration: Cloud-based platforms enable secure data
storage, collaboration, and real-time access to information.
 Transparency: They facilitate communication and data sharing among supply chain
partners, promoting transparency and coordination.
 Automation and Robotics:
 Warehouse Efficiency: Automation technology, including robotics and automated
guided vehicles (AGVs), streamlines warehouse operations and improves order
fulfillment.
 Benefits: These technologies reduce labor costs, enhance accuracy, and increase
efficiency.
 Blockchain
 Enhanced Traceability: It reduces fraud, ensures the authenticity of products, and
enhances traceability.
 Secure Transactions: Blockchain offers a secure and transparent way to record and
verify transactions across the supply chain.
 Artificial Intelligence (AI) and Machine Learning:

4.  Data-Driven Insights: AI-driven algorithms and machine learning models analyze
data to make predictions and recommendations.
 Applications: AI is applied to demand forecasting, inventory optimization, and route
planning.
Learnings from the past
 Solution should have a feedback mechanism for continuous learning
 Solution should be industry agnostic
 Solution should be robust and resilient
 Less reliance on documentation, UI and messages should be intuitive in themselves or the
solution should be able to guide user to implement remediations with minimal clicks
 Should be easy to use – be pro-user
 Chat interface to show each user’s most pressing concerns and it should offer suggestions as
well
 Solution should be easily maintainable
Competitors
 Oracle Fusion Cloud Supply Chain Management (SCM):
 Oracle’s solution provides end-to-end supply chain management capabilities,
including procurement, inventory, logistics, and demand planning. It integrates
seamlessly with other Oracle products.
 SAP Ariba Procurement
 Anaplan
 Anaplan offers connected strategy and planning across the enterprise. Its
proprietary Hyperblock™ technology enables real-time performance
contextualization and future outcome forecasting.
 Acumatica
 Acumatica delivers cloud-based business software applications, including
dashboards, reporting tools, document management, and customization features.
 Precoro:
 Precoro is a cloud-based procurement optimization solution. It automates
purchasing processes, streamlines approvals, and centralizes operations.
 BOARD:
 BOARD is a business decision-making platform that combines modeling, planning,
and analysis in one cloud-based solution.