Supply chain management involves coordinating the flow of goods and information between suppliers, manufacturers, warehouses, and retailers. The goal is to match supply and demand efficiently. Key aspects of SCM include managing procurement, customer relationships, and responding quickly to problems. Trends include measuring SCM ROI, greening supply chains, integrating technology like RFID, and adopting lean principles. Creating an effective supply chain requires strategic sourcing, trust between partners, information sharing, and metrics to monitor performance. Challenges to effective SCM include integrating organizations, gaining management support, dealing with uncertainties, and responding to issues in a timely manner.

1. Production & Operations Management:
Supply Chain Management
Ravindra Ojha
15th Mar’ 2023

2. Supply Chain Management
Supply Chain - https://www.youtube.com/watch?v=J0Omt8BnWpc

3. Why SCM ? - The changing world
• Proliferation of product lines
- Every time you walk into a neighborhood store, do not be surprised to find that even a simple product like toilet
soap has 50 odd varieties
• Life Cycles
• Cell phone, Laptop, Automobile. It is shrinking rapidly.
• Outsourcing
• Dell computers, net work design, information system to connect and coordinate. Era of specialization.
• Globalization
• Automotive parts, Impact of tariff structure, facility location & capacity management.
Farther…Faster…Flatter…Fewer
 Competition & Price
- Product innovation/brand equity no longer trigger price. Reduce cost through efficient value chain (VMI, new
services, RFID, collaboration)
• Collaboration
- Collaboration between stakeholders in the extended supply chain for decreasing value chain costs through better
management decisions.
 Technology
- Food industry. Application of ERP, RFID, AI, IOT and inventory/logistics optimization, sales &operations planning,
Business intelligence etc.
 Shift in power structure in the chain-
- In every industry entities closer to customer are becoming more powerful.

4. • Supply Chain:
• the sequence of organizations - their facilities, functions, and activities - that
are involved in procuring, producing and delivering a product or service
• Logistics:
• the part of a supply chain involved with the forward and reverse flow of
goods, services, cash, and information.
Supply Chain Vs Logistics

5. 15-5
Typical Supply Chains

6. • Supply chain functions and activities
• Forecasting
• Purchasing
• Inventory management
• Information management
• Quality assurance
• Scheduling
• Production and delivery
• Customer service
Functions and Activities

7. • The goal of SCM is to match supply to demand as effectively and
efficiently as possible
• Key issues:
1. Determining appropriate levels of outsourcing
2. Managing procurement and suppliers
3. Managing customer relationships
4. Being able to quickly identify problems and respond to them
Key Aspects of SCM

8. • Three types of flow management
• Product and service flow
• Involves movement of goods and services from suppliers to customers
as well as handling customer service needs and product returns
• Information flow
• Involves sharing forecasts and sales data, transmitting orders, tracking
shipments, and updating order status
• Financial flow
• involves credit terms, payments, and consignment and title ownership
arrangements
Flow Management in SCM

9. • Trends affecting supply chain design and management:
• Measuring supply chain ROI
• “Greening” the supply chain
• Re-evaluating outsourcing
• Integrating IT, automation, technology to move towards I4.0
• Adopting lean principles and Managing risks
Trends in SCM
GST?

10. • Global supply chains
• Product design often uses inputs from around the world
• Some manufacturing and service activities are outsourced to
countries where labor and / or materials costs are lower
• Products are sold globally
• Complexities
• Language and cultural differences
• Currency fluctuations
• Political instability
• Increasing transportation costs and lead times
• Increased need for trust amongst supply chain partners
Global Supply Chains

11. 15-11
Vendor Analysis, Supplier Audits & Supplier Certification
• Vendor analysis
• Evaluating the sources of supply in terms of price, quality, reputation, and
service
• Supplier audit
• A means of keeping current on suppliers’ production (or service) capabilities,
quality and delivery problems and resolutions, and performance on other
criteria
• Supplier certification
• Involves a detailed examination of a supplier’s policies and capabilities
• The process verifies the supplier meets or exceeds the requirements of a buyer

12. • Radio frequency identification (RFID)
• A technology that uses radio waves to identify objects, such as goods in
supply chains
• Similar to barcodes but
• Are able to convey much more information
• Do not require line-of-sight for reading
• Do not need to be read one at a time
• Has the ability to:
• Increase supply chain visibility
• Improve inventory management
• Improve quality control
• Enhance relationships with suppliers and customers
Tracking Goods: RFID

13. Logistics vs Supply Chain Management
Logistics is the management of the flow of resources between the point of origin and the point
of consumption in order to meet some requirements, for example, of customers or corporations.
• The logistics of physical items usually involves the integration of information
flow, material handling, packaging, inventory, transportation, warehousing, and
often security.
Customers
Suppliers Intra- organizational
Movement
Reverse
Logistics
Inbound
Logistics
Outbound
Logistics
Logistics Transportation Links

14. Reverse Logistics
• Need to find innovative ways of recovering and recycling
of products to minimize environmental impact
• May also include shipment of repairable items for
refurbishment
• Often not a priority
25
• Customer returns
– Warranty failures
– Incorrect or damaged orders
• Repair and remanufacture process support
• Recycling (increasing importance!)

15. 15-15
Third Part Logistics : 3-PL
• Third-party logistics (3-PL)
• The outsourcing of logistics management
• Includes
• Warehousing and distribution
• Potential benefits include taking advantage of:
• The specialists’ knowledge
• Their well-developed information system
• Their ability to obtain more favorable shipping rates

16. Third Party Logistics
• “Third-party Logistics is simply the use of an outside company
to perform all or part of the firm’s materials management and
product distribution function.” -- Simchi-Levi (2000)
• “A relationship between a shipper and third party which,
compared with the basic services, has more customized
offerings, encompasses a broad number of service functions and
is characterized by a long-term, more mutually
beneficial relationship” --- Murphy & Poist (1998)
Third Party Characteristics
• Perform outsourced logistics activities
• Process management / Multiple activities
• More customized services
• Mutually beneficial and risk-sharing relationship
• Long-term commitments (1~ 3 years)
Why is it needed?
• Advantages
o Cost reduction
o Focus on core competency
o Improved efficiency, service and flexibility
Disadvantages
o Impact on in-house workforce

17. • It begins with strategic sourcing
• Analyzing the procurement process to lower costs by reducing waste and
non-value-added activities, increase profits, reduce risks, and improve
supplier performance
• There must be
• Trust
• Effective communication
• Information velocity
• Supply chain visibility
• Event management capability
• Performance metrics
Creating an Effective Supply Chain

18. 15-18
Challenges
• Barriers to integration of organizations
• Getting top management on board
• Dealing with trade-offs
• Small businesses
• Variability and uncertainty
• Response time

19. Mumbai Dabbawala
Six sigma
Learnings?

20. THANKS