Supply Chain Management

1. Supply Chain Management
Gaurav Awasthi

2. Defining Supply Chain
• Most Companies are both supplier to the
customers and also are a customer for their
suppliers.
• Hence they are just a link in a chain.
• Supply Chain can be defined as:
– The network of interconnected facilities and activities
that perform the function of
• Product Development
• Procurement of materials from the vendors
• The movement of material between facilities
• Manufacturing
• Distribution of finished goods
• And finally after market support

3. Some more illustration..
Farmer
Grain
Wholesaler
Cereal
Producer
Grocery
Wholesaler
Grocery
Retailer
Consumer
Example of a Supply Chain
• All the links in the supply chain share physical material
as well as information with each other.
•Since each link in the chain adds some value for the next
link, the supply chain is also referred to as “Value Chain”.

4. Definition of Supply Chain Management
• Supply chain management (SCM) is the
management of the flow of goods.
• It includes the movement and storage of raw
materials, work-in-process inventory, and finished
goods from point of origin to point of
consumption.
• Supply chain management has been defined as
the "design, planning, execution, control, and
monitoring of supply chain activities with the
objective of creating net value, building a
competitive infrastructure, leveraging
worldwide logistics, synchronizing supply with
demand and measuring performance globally.

5. Objective of Supply chain
Management
• Customer Satisfaction
• Consider a large vertically integrated company such
as Reliance Industries.
• They own raw material sources, Production plants,
distribution networks and retail outlets also.
• These links share data with each other, have visibility
and have common goal to serve customer profitably.
Hence the objective of a good SCM is to “plan,
coordinate and control all the activities in the supply
chain so that it achieves high level of consumer
service while keeping the costs low.”

6. A Complex supply chain web for a laptop manufacturing company

7. Challenges and Increased need of
Supply Chain Management
1. Increased Outsourcing:
– Manufacturer should focus on their Core Job.
– Lots of non-core work is outsourced to external
experts. E.g. Car companies outsource gauge,
speedometers, mattings to expert
manufacturers.
– Hence there is a need to coordinate these
different entities and activities.

8. 2. Lead Time Compression: Increasingly there is less
and less time between order received and delivery
due to competition.
3. Globalization: Suppliers as well as Customers could
be located even in the remotest part of the world.
4. Shortened Product Cycles: New products are being
introduced at faster rates. If goods are held in
pipeline for longer they may become obsolete.
5. Rationality of Myopia: When a link in the supply
chain argue that it should focus on its own work
rather than sharing info with suppliers and
customers.

9. Ways to Improve Supply Chain
Performance
1. Faster Order, Communication, Transportation: This can be
achieved by contracting with third party logistics providers,
ERP systems, MIS System.
Example
Levi Jeans stores 130 items of every type of jeans in their stores. All the
details of each item and stocks are stored in central database. All their
stores are connected with each other with the help of ERP Software. All
the jeans are equipped with a unique Barcode.
It is very important for every store to stock minimum number of items
of every variety along with keeping transportation cost low.
Now when any store sells any of the item it scans its barcode. The item
is subtracted from its inventory. The information is sent to the supplier.
The supplier restocks the item from the nearest warehouse. The store
again scans the barcode while receiving the material and updates its
database.

10. Ways to Improve SCM contd…
2. Work with more frequent smaller deliveries:
Smaller lot size accommodates variety, increases
response rate and reduces cost of stocking.
3. Simplifying the Product: Reduce number
components in the product and use common
components. This reduces number of items to be
held in stocks.
4. Reduce number of Suppliers and develop close
relationships with them: Few reliable suppliers
with whom you share your data work with better
synchronization and reduce cost.
5. Virtual Integration: Dell’s supplier doesn’t charge
it until they receive order from online customers
and ship within 15 minutes.

11. Thank you…
Doubts and Queries…