Supply chain management involves efficiently integrating suppliers, manufacturers, warehouses, and customers to minimize costs while meeting service requirements. It includes activities like demand forecasting, procurement, manufacturing, and distribution. Effective inventory control is important to minimize investment and costs while avoiding stockouts and facilitating production. Organizations must optimally plan and utilize resources like people, money, machines, and materials within time and technology constraints to profitably satisfy customers.

2. You can move a mountain and you can
Whatever the mind of man can conceive and believe it can
achieve. When you believe “I Can Do It, The How to Do It
Develops!!

3. Suppliers Customers
Company
Supply Chain Management
Supply Side Demand Side
Supply chain management is a set of approaches used to efficiently integrate
suppliers, manufacturers, warehouses, and customers so that merchandise is
produced and distributed at the right quantities, to the right locations, and at
the right time in order to minimize system wide costs while satisfying service-
level requirements.

4. INBOUND LOGISTICS
- Demand forecasting and planning
- Materials planning and management
- Inventory management and control
- Vendor development & management
- Purchasing and sourcing
OUTBOUND LOGISTICS
- Dispatch planning and scheduling
- Distribution
- Warehouse management
- Order Fulfillment
- Customer Service
MANUFACTURING LOGISTICS
- Capacity planning
- Production planning and scheduling
- Operations
- Manufacturing

5. Any organisation has several resources these include 4 M’s
namely MEN, MONEY, MACHINES, MATERIALS. It is the
function of Another ‘M’ namely MANAGEMENT optimally plan &
utilise these resources within the framework of 2 T’s namely
TIME, TECHNOLOGY & Environmental Forces so as to produce
products or services of acceptable quality (for customer
satisfaction) and a reasonable amount of profit.
While any two organisations may have identical resources of 4
M’s at their disposal, one may produce good profits and the other
may not do as well or even make losses. What is the ingredient
that is causing this difference?

6. Inventory (Raw Materials, Components, Work in Process, Finished
Goods, MRO Items) may be defined as “usable but idle resource which
has an economic values awaiting for further use or process. It contributes
anything between 40%-60% of cost of any product. Inventory carrying
cost is very high (27%-33% in the Indian Context).
Inventory Control is a process of deciding what and how much of
various items are to be kept in stock. It also determines the time and
quantity of various items to be procured.
Why Inventory Control??
1. Minimize financial Investments in Inventory
2. To Facilitate Production Operations
3. To Avoid Losses from Inventory Obsolescence
4. To Improve Customer Service

7. Purchase
Goals
In Right Quantity
At Right Price
At Right Time
Of Right Quality
At Right Place
From Right Source
Buying Materials

8. MD
Dir Dir Dir COF
Manager
(Import & Export)
Accounts Personnel
Production
In charge
HOD
(Stores & Purchase)
Administrative
Staff
Supervisor 1
Supervisor 2
Supervisor 3
Supervisor 4
Storekeeper 1 Storekeeper 2

9. MD
Dir
HOD
(Stores & Purchase)
Storekeeper
(Raw Materials)
Storekeeper
(Sub Contracting Comp.)
Storekeeper
(Consumables & Misc.)
Storekeeper
(Bought out Components)
Asst
Asst
Asst
Asst
Asst
Asst
Asst
Asst

10. Stores & Pur.
Plant A
Production
Material Requisition
Supply of
Material
Supplier
Enquiry
Quotation
Plant B
Stock Transfer
Component Process
Purchase Order
Follow Up
Accounts
H.O.
Payment Advise Copy
Stock Statement
GRN, Invoice
PO Copy
Payment

11. HO
Plant
Material Requisition
PO Copy
Domestic
Supplier
Enquiry
Quotation
GRN&Invoice
FollowUp
Purchase Order
FollowUp
Overseas
Supplier
Follow Up
Purchase Order
Quotation
Enquiry
Payment
GoodsArrivalInfo.
Payment

12.  Calculation of Material Requirement of upcoming financial
year in advance i.e., first week of January every year based on
yearly production schedule.
 Release of tentative yearly purchase schedule (blanket order)
to the supplier.
 Confirmation of monthly requirement, release of purchase
orders (taking into consideration the stock lying in store,
materials in transit or in process with sub contractor and
quantity on order) for upcoming month in view of lead time.
 Weekly review of stock at par with production schedule
 Daily review of stock level and replenishment

13. Lead Time
Maximum
Reorder
Minimum
Time (in Days)
UnitsInStock
Safety
Inventory
Average Average
Cycle
Inventory
 Lot Size Reorder Point Policy
 Fixed Order Interval Scheduling Policy
 Optional Replenishment Policy

14. Inventory Related Cost
 Ordering Cost  Inventory Carrying Cost  Stock Out Cost
Economical Ordering Quantity (EOQ Model) to minimize ordering cost and
inventory carrying cost
Qty Per Order (Q)
Total Cost
Inventory
Carrying Cost
EOQ
Ordering Cost
CostofCover
AnnualRequirementofanitemEOQ= 2AS
Ci
Where
Q= Qty per Order
A= Annual Requirement
in Unit
S = Ordering Cost per Order
C = Cost per Unit or Item
i = Inventory carrying Cost
expressed as % of value

15. Identification and grouping of Items depending upon Value of item
(cost per unit) as HML, Criticality as VED, Usage frequency as
FSN, Usage Value as ABC, Availability Position as SDE.
100
90
75
10 25 100
A
B
C
CumulativePercentValue
Cumulative Percent Number

16. Where are we going wrong??
 Vendor Rating Index (Quality) = No. of Lots Rejected
No. of Lots Received
 Vendor Rating Index (Delivery) = Delivery On Schedule
Total No. of Deliveries
 Rush Order Cost (Index) = Price Paid for Rush Order Material
Price Normally Paid for this Material
 Inventory Turnover Ratio = Annual Sales
(Finished Goods) Average Inventory
 Out of Stock Index = No. of Times of Out of Stock
No. of Times Requisitioned

17. The presented Perspective for Year 2010 can only be
achieved by TEAM Work!!
End Thought
Together
Everyone
Achieve
More
Sales
Finance
Production
Engg.
Design
Stores
Purchase