The document provides an overview of supply chain management, detailing its integration of key business processes that deliver products, services, and information to customers and stakeholders. It discusses the historical evolution of supply chain management, key dynamics among supply chain players, inventory management, and planning strategies such as sales and operations planning. Furthermore, it highlights tools for improving production processes, including just-in-time and lean manufacturing strategies, while emphasizing the importance of forecasting, process efficiency, and waste reduction.

1. Supply Chain Management
Introduction to
SUPPLY CHAIN MANAGEMENT
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2. Supply Chain Management
Agenda
Introduction to Supply Chain Management
Planning- Supply Chain Management
Production- Supply Chain Management
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3. Supply Chain Management : General Introduction to Supply Chain Management
Introduction
Supply Chain Management is the integration of key business processes from
end users through original suppliers that provides products, services and
information that add value to customers and other stakeholders.
- Global Supply Chain Forum (GSCF)
Two forces can be drawn out that leads in a Supply chain process of goods:
1. Product Supply
2. Customer Demand
Supply Chain Management flows can be divided into three main flows:
1. The Product Flow
2. The Information Flow
3. The Finances Flow
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4. Supply Chain Management : General Introduction to Supply Chain Management
Goods Information
Work In Progress
Raw Materials
Supplier’s Supplier supplies
the Product
Finished Goods
Reverse Funds
Consumer’s Demand- consumed by
the End Consumers
Fig 1. showing the supply chain for breads
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5. Supply Chain Management : General Introduction to Supply Chain Management
History
 1750 - 1800
 Industrial Revolution
 Era of Mechanical Inventions
 Product and process complexity increase

1800’s
Increased factory complexity
 Birth of Industrial Engineering movement

 1900’s
Assembly line, Mass production
 Henry Gantt: Gantt charts, Scheduling
 Human factors
 Statistical Quality Control


1989 - 1993
 Business Process Reengineering
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6. Supply Chain Management : General Introduction to Supply Chain Management
Functional View of Supply Chain Management
Fig 2. The Supply Chain Operations Reference Model (SCOR Model)
•
•
•
The ultimate objective of the SCOR Model is to build a
superior supply chain that is integrated with the overall
organizational strategy.
It provides a framework that links business processes,
best practices, metrics and technology into a unified
structure. It is hierarchical in nature, interactive, and
interlinked.
The SCOR process reference model contains:
 Performance Metrics
 Processes
 Practices
 People
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The five core supply chain performance attributes
are:
 Reliability
 Responsiveness
 Agility
 Costs
 Assets
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Source: https://supply-chain.org/f/SCOR-Overview-Web.pdf
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7. Supply Chain Management : General Introduction to Supply Chain Management
Supply Chain Players
 Simple Supply Chain
 Supplier
 Company/Factory
 Customer
 Extended Supply Chain
 Supplier’s supplier
 Supplier
 Company/factory
 Customer
 Customer’s Customer
 Service Provider
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Supplier
Company
Customer
Fig 3. Simple Supply Chain
Supplier’s
supplier
Supplier
Company
Customer
Customer’s
customer
Service
Provider
Fig 4. Extended Supply Chain
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8. Supply Chain Management : General Introduction to Supply Chain Management
Supply Chain Dynamics
• The main task of the supplier in the
supply chain is to make balance
between the customer’s demand
and the product supply.
• In supply chain, the players are
always responsible to maintain the
level of inventory against the stock
uncertainties providing a higher
level of service. The sources of
uncertainties are:





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Stock
Wrong forecasts
Late deliveries
Poor quality
Machine breakdowns
Canceled orders and so on.
Inventory
Fig 5. The Inventory Challenge
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9. Supply Chain Management : General Introduction to Supply Chain Management
Logistics
Logistics Management is that part of Supply
Chain Management that plans, implements,
and controls the efficient, effective forward
and reverse flow and storage of goods,
services and related information between the
point of origin and the point of consumption in
order to meet customers' requirements.
-Council of Supply Chain Management
http://www.cscmp.org
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10. Supply Chain Management : Planning- Supply Chain Management
Bullwhip Effect
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11. Supply Chain Management : Planning- Supply Chain Management
Result and Solution for Bullwhip Effect
Solution
Results






Excess Inventories
Problems with quality
Increased raw material costs
Overtime expenses
Increased shipping costs
Lost customer service
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Improve communication
along supply chain
Improve sources of forecast
data
Work with firms upstream
and downstream in the
supply chain
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12. Supply Chain Management : Planning- Supply Chain Management
Inventory
Inventory can be defined
as the total amount of
goods and/or materials
that any business firms
holds in a stock. There are
3 main forms of Inventory:
 Raw materials
 Work in Progress
 Finished goods
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Protect against
Uncertainty
Balancing Supply
and demand
Cost Reduction
Reasons for
Inventory
Anticipation
stock
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Protect against
quality defects
Stabilize
manufacturing
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13. Supply Chain Management : Planning- Supply Chain Management
Types of Inventory
•
•
•
•
•
•
•
Cycle or replenishment Stock
Safety Stock
In-transit Stock
Seasonal Stock
Promotional Stock
Speculative Stock
Dead or obsolete Stock
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14. Supply Chain Management : Planning- Supply Chain Management
Cycle Stock & Safety Stock
Cycle stock is the average amount
of inventory, a business needs to
meet customer demand between
the times it orders more inventory
from the supplier.
Delivery
Sales
Cycle Stock
7
1
6
Tuesday
-
1
5
Wednesday
-
1
4
Thursday
-
1
3
Friday
-
1
2
Saturday
-
1
1
Sunday
-
1
0
Total
Safety stock or buffer stock is the
amount of inventory or stock that is
kept on hand in order to avoid
uncertainty.
Monday
7
7
-
Table. Showing cycle Stock
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15. Supply Chain Management : Planning- Supply Chain Management
Reducing Inventory
The cycle stock can be reduce by ordering more
often.
In safety stock case,




Reduce lead-time
Reduce supplier uncertainty
Reduce forecast error
Reduce service level
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16. Supply Chain Management : Planning- Supply Chain Management
Demand Characteristics
Level
High
Low
Frequency
Patterns
Product life
cycle
positioning
Product
classification
Fast
Stable
Launch
Slow
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Trend
Emerging
A
20% represent 80%
Established
Seasonal
Decline
Withdrawal
B
C
30% represent 15% 50% represent 5%
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17. Supply Chain Management : Planning- Supply Chain Management
Frequency of Demand
Different Patterns
of Demand
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18. Supply Chain Management : Planning- Supply Chain Management
Product Life Cycle
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Product Segmentation
Using Pareto’s Law
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19. Supply Chain Management : Planning- Supply Chain Management
Forecasting Methods
1.
QUALITATIVE
2. QUANTITATIVE/ STATISTICAL
Time Series Method (assumption of continuity)
Human reasoning and judgment
The components Purchase, Time & Season
are taken from the past and projected into
the future using the assumption of continuity.
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20. Supply Chain Management : Planning- Supply Chain Management
Models of Order Cycle Management
1. Continuous review (fixed order quantity)
Inventory is reviewed daily and a fixed quantity is ordered whenever the
stock drops below a certain point
2. Periodic review (fixed order cycle)
Inventory is reviewed at regular intervals and every time a sufficient
quantity is ordered to raise the inventory level up to a certain level.
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21. Supply Chain Management : Planning- Supply Chain Management
The Economic Order Quantity (EOQ)
How much should I order at a time?
The magical formula:
C = ordering cost per order
R = annual demand in units
P = purchase cost of one unit
F = annual holding cost as a fraction of unit cost
PF = holding cost per unit per year
Method for calculating order quantities at individual SKU (Stock keeping unit) level
(Norek 1998)
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22. Supply Chain Management : Planning- Supply Chain Management
Sales and Operations Planning
A formal process, consisting of series of meetings, where data from various
areas of business is discussed and decisions are made.
Normal Time Frame
Takes a monthly look at product groups at least 6- 12 months across the
planning horizon.
Types of Data Considered

Current plan for each product group

Manufacturing plans and capacity

Current finished goods inventory

Distribution capacity

Sales forecasts

Shipping capacity

Purchase Orders received

Performance measures

Materials available

Customer Service
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23. Supply Chain Management : Planning- Supply Chain Management
Sales and Operations Planning Cycle
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24. Supply Chain Management : Planning- Supply Chain Management
Benefits of S & OP Process
 Greater visibility of demand and supply
 Improved Product Lifecycle Management process
 Better promotional planning
 Improved inventory management
 More predictable revenue management
 More accurate budget forecasting
Why S & OP Implementations fail?
 People
 Process
 Strategy
 Performance
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25. Supply Chain Management : Planning- Supply Chain Management
Tips for a Successful Implementation
 Develop a formal structure to support S&OP.
 Identify KPIs prior to beginning & monitor them monthly to identify areas for
improvement.
 Attitude of continuous improvement.
 Stabilize the Demand Planning process
 Hold regular meetings
The S&OP process is a decision making tool – don’t confuse having
meetings with making progress.
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26. Supply Chain Management : Production- Supply Chain Management
Introduction to MAKE
The term “MAKE” describes the process that
transforms inputs into outputs
MAKE can be defined as the physical act of making
the product.
It is also known as Manufacturing, assembling or
processing function
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27. Supply Chain Management : Production- Supply Chain Management
From Craft to Mass Manufacturing
Craft
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Mass
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28. Supply Chain Management : Production- Supply Chain Management
Five types of Manufacturing Process
Project
Batch
• Meets very specific
customer
requirements
• Too large to be
moved once
completed
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Job Shop
• End product meets
the unique customer
order requirements
• Assembly usually
takes place offsite
• Similar items are
provided on a repeat
basis
• Process is divided
into a chain of
activities that take
place after each
other
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29. Supply Chain Management : Production- Supply Chain Management
Five types of Manufacturing Process
Line
Continuous Flow
• Products are passed
through thesame
sequence of
operations
• Can be made to
order or to stock
• Choice of process is
based on the liquid
or gas-like product
nature and high
volumes
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Other set up
Considerations
• Product companies
can implement a
combination of all
these manufacturing
processes
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30. Supply Chain Management : Production- Supply Chain Management
Manufacturing Planning and Control
Demand forecast
finished goods
Master Production
Schedule
Customer Orders
Bill of Materials
Material requirement
Planning
Inventory file
Assembly
Dispatch
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31. Supply Chain Management : Production- Supply Chain Management
Other MAKE planning concepts
Capacity
Requirements
Planning
Distribution
Requirements
Planning
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• Process of determining the impact on
key resources required to support
manufacturing plan
• Focuses on the planned delivery of
finished products to customers
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32. Supply Chain Management : Production- Supply Chain Management
Just-in-Time
Powerful strategy for improving operation
Uses a systems approach to develop and
operate a manufacturing system
Organizes the production process so that
parts are available when they are needed
A method for optimizing processes that
involves continual reduction of waste
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33. Supply Chain Management : Production- Supply Chain Management
Philosophy behind JIT
Traditional approach
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34. Supply Chain Management : Production- Supply Chain Management
Philosophy behind JIT
 Just-in-time approach
Inventory level
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35. Supply Chain Management : Production- Supply Chain Management
Overview
Pull Scheduling
Elements of JIT
A
system
of
controlling materials
whereby the use
signals to the maker
or provider that more
material is needed.
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People
Plant
System
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36. Supply Chain Management : Production- Supply Chain Management
Limitations of JIT




Cultural difference
Loss of safety stock
Decreased individual autonomy
Industry-specific success
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37. Supply Chain Management : Production- Supply Chain Management
Lean Manufacturing
 Lean focuses on flow, the value stream and eliminating “Muda”, the
Japanese word for waste.
 A way to eliminate waste and improve efficiency in a manufacturing
environment.
 Lean manufacturing is the production of goods using less of
everything compared to traditional mass production: less waste,
human effort, manufacturing space, investment in tools, inventory,
and engineering time to develop a new product.
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38. Supply Chain Management : Production- Supply Chain Management
Improving Performance through waste
reduction
Over-production: producing more than the customer orders or producing
early. Inventory of any kind is usually waste.
Queues: idle time, storage, and waiting are wastes.
Transportation: moving material between parts, between work centers, and
handling more than once is waste.
Motion: Movement of equipment or people.
Over-processing: work performed on product that adds no value.
Inventory: unnecessary raw material, work-in-progress (WIP), finished goods,
and excess operating suppliers.
Defective Product: Returns, warranty claims, rework and scrap
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39. Supply Chain Management : Production- Supply Chain Management
Tools to Improve “Make” Performance
Bottle Leakage
391 (100%)
 Loss tree analysis
 Tool to identify
priorities
when aiming for quality
improvements.
 A loss tree is a visual aid to
identify where the issues are,
it allows the user to focus on
specific areas rather than
generating a problem list
Bottle Leakage
219 (56.01%)
Caps
40 (10.23%)
Why are the caps faulty?
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Packing
172 (43.99%)
Bottles
179(45.78%)
What’s the problem
with packing?
Why are the bottles
damaged?
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40. Supply Chain Management : Production- Supply Chain Management
Tools to Improve “Make” Performance
5- Why Analysis
 Method of exploring the causes
of problems by asking “why?”
five times
 This method builds upon the
principle that the real cause can
often be found as a result of
repeating “why?” five times
 Simple structured root cause
analysis technique applicable to
simple issues as well as complex
problems with many variables
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41. Supply Chain Management : Production- Supply Chain Management
Tools to Improve “Make” Performance
Fishbone Diagram
 Effective
problem-solving
tool to be used by groups of
people involved in finding
the possible causes of
problems.
 The cause can be split into
the four categories man,
method,
materials
and
machine.
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42. Supply Chain Management
References
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•
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•
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https://supply-chain.org/f/SCOR-Overview-Web.pdf
https://searchmanufacturingerp.techtarget.com
http://www.cscmp.org
http://www.slideshare.net/anandsubramaniam/the-bullwhip-effect
http://smallbusiness.chron.com/justintime-method-31185.html
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43. Supply Chain Management
Contact
ujjwaljoshi1990@gmail.com
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