The document discusses the key components of supply chain management. It outlines seven main components: planning, procurement, production planning, inventory management, warehousing, logistics. Planning involves demand forecasting and supplier relationships. Procurement acquires materials. Production planning maximizes output. Inventory management maintains optimal stock levels. Warehousing stores goods to reduce costs. Logistics delivers products to customers. The components work together to efficiently manage the flow of goods from suppliers to customers.

1. SUPPLY CHAIN
MANAGEMENT
• A supply chain consists of all the activities and entities that are involved in
extracting, processing, manufacturing, distributing and selling the products to
the ultimate customers. However, the concept of SCM is much broader than
that of the marketing channels as SCM goes back to a distant starting point /
root and includes the raw material suppliers.

2. SUPPLY CHAIN
MANAGEMENT
• “Supply chain management is the integration of businesses from end user
through original suppliers that provides products, services, and information
that add value for customers.”
• “A supply chain is a network of facilities and distribution options that
performs the functions of procurement of materials, transformation of these
materials into intermediate and finished products, and the distribution of
these finished products to customers.”
• Supply chain management is the combination of art and science that goes into
improving the way your company finds the raw components it needs to make a
product or service, manufactures that product or service and delivers it to
customers.

3. SUPPLY CHAIN
MANAGEMENT
• SCM represents the processes and technical systems that enable multiple
organizations to collaboratively design, build and deliver products (though not
necessarily services).
• Integrated supply chain management is a process-orientated, integrated
approach to procuring, producing, and delivering products and services to
customers. SCM has a broad scope that includes sub-suppliers, suppliers,
internal operations, trade customers, retail customers, and end users. It covers
the management of material, information, and funds flows. It is a cradle-to-
grave approach.
• SCM has grown over the past two decades from fragmented and un-automated
processes to complex, integrated, and highly automated systems.

4. SCOPE OF SUPPLY
CHAIN MANAGEMENT
• Supply Chain Management includes, planning, design, control and implementation of all business
processes related to procurement, manufacturing, distribution and sales order fulfilment functions of
a business. Thus Supply Chain Management includes managing supply and demand, sourcing raw
materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry
and order management, distribution across all channels, and delivery to the customer.
• Due to its wide scope, supply chain management must address complex interdependences, in effect
creating an “extended enterprise” that reaches far beyond the factory doors.
• All these activities involve multiple networks of vendors and service providers. These networks of
suppliers and service providers have to be integrated and coordinated by the supply chain
management experts in such a way that the raw material moves smoothly from various procurement
points to the centers of production and the finished goods move smoothly from the centers of
production to the various points of sale/ delivery to consumer, across the globe.

5. SCOPE OF SUPPLY
CHAIN MANAGEMENT…
• Logistics is the back bone on which the supply chains are driven. Logistics refers to the management
of flow of goods and supplies involving information, data and documentation between two entities or
points. Logistics plays an important role in the post procurement function of delivery of raw material
and supplies from the supplier to the factory or production center and the dispatch of finished goods
from the factory to the point of delivery to the customer.
• When goods move from supplier to factory to point of sale they flow through a network of
transportation by road, rail, ship or air. They may be stored in warehouses before being moved to
forward locations. This entire activity involves various suppliers, agents and agencies including
freight forwarders, packers, customs department, distributors and Logistics service providers etc.
• Logistics therefore is an integral component of Supply Chain Management. Though logistics and
supply chain are intricately linked, both do not mean the same. Logistics is a sub component and
extension of supply chain.

6. IMPORTANCE OF SUPPLY CHAIN
MANAGEMENT
• It is said that, today, the supply chain management system is the back-bone of a
business organization. This statement itself shows how important a component of
business, is the supply chain and its management. Whenever a product is introduced
and advertised in the market, a demand for the product is created. It is at this point that
the consumer enquires about the product in various available retail/wholesale outlets.
• At this point it is very essential that the entire market in the country and all the sales
counters have the product, where the customer is able to buy and take delivery. If for any
reason the product is not available at the right place and the right time, it can result in a
drop in the customer’s interest and customer demand. This can have a disastrous effect
on the success of the product.

7. IMPORTANCE OF SUPPLY CHAIN
MANAGEMENT CONT.…..
• Thus a proper Transportation network design and management is of great importance, as
a support to the sales and marketing strategy. In fact it can be said that without proper
transportation network design and management, there is no way that the sales and
marketing strategy can succeed. Thus it is an effective supply chain management that will
ensure an effective Market Coverage and the availability of the right product at the right
places across various locations in the country.
• Another reason why supply chain management is important is because inventory control
and inventory visibility are the two critical elements in any business operation. Inventory
control and visibility have a direct impact on the cost of production and hence a direct
impact on the profitability of the organization. The lesser the capital locked up in
inventory the more will be the profitability and vice versa.

8. IMPORTANCE OF SUPPLY CHAIN
MANAGEMENT CONT.…
• However visibility of inventory is also a factor that has to be considered. The
two have to be balanced and the right or optimum inventory turnaround has to
be established. Every company has a standard for inventory turnaround that is
ideal or optimum for the particular business. Inventory turnaround is the
number of times the inventory is sold and replaced during a particular period.
This period is usually twelve months.
• Today inventory or stock of finished goods is held at many distribution centers,
wholesale and retail locations across the country. These may or may not be
managed by the organization itself. Some could be managed by third parties.
Inventory could also be in the pipeline in transportation. Any loss of inventory
anywhere in the supply chain will result in a loss. As such the effective control of
inventory is an important factor of the supply chain management function.

9. OBJECTIVES OF SUPPLY CHAIN
MANAGEMENT
• “The goal of logistics and supply chain management is timely delivery,
competitive pricing, mobility, and flexibility, together with innovative
transportation services”.
• The basic objective of supply chain management is to ensure minimum cost and
maximum efficiency in every aspect of handling of raw material, component
parts and finished goods as they move from production center to the final
consumer.
• SCM works on the five basic components:
Plan – Source – Make – Deliver – Return

10. BASIC COMPONENTS OF SUPPLY
CHAIN MANAGEMENT
1. Demand planning and forecasting
2. Demand collaboration, i.e., collaborative resolution process to determine consensus forecasts.
3. Order promising, i.e., when can one promise a product to a customer taking account lead times and
constraints.
4. Strategic network optimization, i.e., what plants and distribution channels should serve, what markets
for what products whether monthly — yearly.
5. Production and distribution planning, i.e., coordinate the actual production and distribution plans for a
whole enterprise may be on a daily basis.
6. Production scheduling.
7. Plan of reduction of costs and management of the performance, i.e., diagnosis of the potential and the
indicators, the organization, evaluation and accounting reporting, evaluation and reporting quality, etc.

11. SCM AND FREIGHT FORWARDING
DIFFERENCE
Supply Chain Professional, of course, has the option to involve in all
areas of the supply chain including procurement, planning etc. whereas
the Freight Forwarder works more closely with the clients and the various
entities involved in the movement of the goods so their work is a bit more
intense

12. ROLE OF FREIGHT FORWARDING IN
SUPPLY CHAIN MANAGEMENT
A freight forwarding company acts as an intermediary between clients and transport agencies to enable the
goods intended to be shipped to reach its final destination. The global market for freight forwarding
services grew by 2.7% in real terms in 2016. All the key logistic players today were traditionally freight
forwarders who later diversified into other logistic segments over time. In Supply Chain Management,
freight forwarders play a significant interlinking role as follows:
1. Global Transportation Network: Freight forwarders are considered as hubs of information owing to
their expertise in international logistical processes which is mainly built on a social network of cross-border
colleagues and contacts. They are well versed in the law of various regions as well as inter cultural
differences and with their knowledge, can help businesses take advantage of the same.

13. ROLE OF FREIGHT FORWARDING IN
SUPPLY CHAIN MANAGEMENT
2. Integration of Operations
Freight forwarders unify the different verticals of supply chain management by conveying the correct
information at the right time and to the right recipient, initiating and facilitating the movement of goods.
3. Consultant/Advisory Services
A business can rely on a freight forwarder to seek advice on competitive situations, export strategies,
trader terms to be included in foreign trade contracts, consumer needs and so on. With every passing day,
more and more logistic chains are evolving into multimodal and cross-border systems and businesses can
no longer do without a service provider who can manage the complexities involved

14. ROLE OF FREIGHT FORWARDING IN
SUPPLY CHAIN MANAGEMENT
4. Cost Effective: Transportation is the largest component in the logistic cost structure of a business and
cost effective freight forwarding agents can help achieve a point of competitive differentiation. With their
established global network, they facilitate import/export by providing standard services at economical
prices. With the advent of freight forwarders, transportation is no more the cost-albatross in supply chain
management.
5. Legal Assistance: All the necessary documents and certifications are prepared by a freight forwarder,
who handles all the legal procedures and hence expediting the entire flow of goods from the shipper to the
destination. Procedural and documentary compliances are taken care of by them thus ensuring hurdle less
global trade activities by a business.

15. ROLE OF FREIGHT FORWARDING IN
SUPPLY CHAIN MANAGEMENT
4. Cost Effective: Transportation is the largest component in the logistic cost structure of a business and
cost effective freight forwarding agents can help achieve a point of competitive differentiation. With their
established global network, they facilitate import/export by providing standard services at economical
prices. With the advent of freight forwarders, transportation is no more the cost-albatross in supply chain
management.
5. Legal Assistance: All the necessary documents and certifications are prepared by a freight forwarder,
who handles all the legal procedures and hence expediting the entire flow of goods from the shipper to the
destination. Procedural and documentary compliances are taken care of by them thus ensuring hurdle less
global trade activities by a business.

16. COMPONENTS OF SUPPLY CHAIN
MANAGEMENT

17. COMPONENTS OF SUPPLY CHAIN
MANAGEMENT CONT.….
The success of any business relates to the effective management of operations. Usually, the lack of
communication is the primary reason behind on-time delivery problems and stockouts.
Therefore, every successful company needs a centralized system for effective communication known
as supply chain management.
This process, at times, can be trickier and challenging to implement.To better understand this
process, I have split it into seven parts. Let’s take a brief introduction to all of them one by one.

18. COMPONENTS OF SUPPLY CHAIN
MANAGEMENT CONT.….
1.Planning:
Every organization needs to manage the resources they have to get the optimal level of benefit from
them.
The planning process helps to determine the customer demand and the supply sources required for
fulfilling the request.
Supply chain managers are required to organize the sources of supply on a timely manner and make
them available to start the production to ensure the supply is available. On-time supply is vital to
ensure customer confidence.
It is also essential to improve relationships with vendors. In the planning process, multiple
departments work together to provide a supplier forecast.

19. COMPONENTS OF SUPPLY CHAIN
MANAGEMENT CONT.….
2.Procurement
Some people take procurement and sourcing in the same context, but there is a difference between
these terms. Sourcing is one part of the procurement process, and the entire process makes the
supply chain management successful.
Procurement is a process to acquire all the material used to complete the product’s production
process. It includes everything used in the manufacturing process, from raw material to packing
material.
This process starts with forecasting and purchase planning in order to get quotations, price
negotiations, order placement, order confirmation, and follow-up until the goods reach the company
premises.
After receiving goods, the suppliers receive their payments based on agreed upon payment terms.
Sourcing: Generally, the sourcing process takes place before the procurement department purchases
goods.The primary purpose of sourcing is to find reliable and quality suppliers capable of supplying
goods as per demand levels.

20. COMPONENTS OF SUPPLY CHAIN
MANAGEMENT CONT.….
3.Production Planning
Production planning is making the plan to get the maximum output from the available resources.
The primary purpose of production planning is to deliver the product within the time limitations.
Also, it helps to keep the quality of the product as per standard process.
Usually, organizations have to manufacture multiple products on the same plant and supply various
customers.Therefore, it is essential to prioritize production as per the time limit and capacity of
production.
Adequate resource allocation for every production line is vital to ensure quality standards. In
production planning, sales and production departments collaborate by keeping in view the past data
and expected sales volume based on forecasts.

21. COMPONENTS OF SUPPLY CHAIN
MANAGEMENT CONT.….
4.Inventory Management:
Inventory management is the most crucial section of supply chain management and my personal
favorite! In this section, we will discuss inventory from raw material and finished goods including
Work in Process (WIP)
Managing inventory allows organizations to find the optimal volume of raw materials required to
satisfy future orders.
The shortage of raw materials can cause delivery delays, leaving a wrong impression on customers. It
is also essential to maintain the optimum level for finished products to handle the expected orders.
Furthermore, effective inventory management helps to avoid the risk of excessive stock levels and
overage inventory long-term.

22. COMPONENTS OF SUPPLY CHAIN
MANAGEMENT CONT….
5.Warehousing:
The warehouse is where they store goods for different purposes.These goods could be in the shape
of raw material, finished product, or semi-finished product.
However, the primary purpose of a warehouse is to reduce transportation cost. For example, every
organization needs a warehouse to store its products, and sometimes they need multiple
warehouses.
Managing warehouses at different locations reduces the overall costs of delivering products to
customers for that area.
Warehouses can keep the goods for a long time to benefit from increased prices. Companies also
save the raw material to use in days of shortage.

23. COMPONENTS OF SUPPLY CHAIN
MANAGEMENT CONT.….
6.Logistics:
Logistics is the procedure of moving items from one place to another. It involves both raw materials
and finished products.
The logistics department delivers the products to customers as per the schedule and handles the
shifting of finished products to warehouses at different locations.
Usually, the logistic department also generates invoices for customers, receive payments, and serves
the returning products.
This department works with a fleet of vehicles for shipping purposes. Many large organizations hire
logistic service providers to handle this department, especially when there is sensitive handling
involvement.They are known as 3PL (third party logistics providers).