The supply chain is defined as the network of organizations involved in processes and activities that produce value for the ultimate customer. Supply chain management (SCM) involves flows of materials, money, and information through procurement, manufacturing, distribution, and customer processes. Effective SCM can provide benefits like reduced costs, improved service levels, business growth opportunities, and preferred supplier status. Key elements of SCM include inventory management, warehousing, and transportation.

2. SCM DEFINED The supply chain is the network of organizations that are involved through upstream and down stream linkages, in different processes and activities that produce value in the form of products and services in the hands of the ultimate customer. Supply Chain may be defined as “flow of materials through procurement, manufacturing, distribution, sales & disposal”.

3. Dynamics of Material Flow Supplier Plant RS Logistics Retailer

4. SCM FLOWS MATERIAL MONEY INFORMATION Procurement Manufacturing Distribution Customer

5. Supply Chain Relationship

6. What is SCM ? Buying Selling Making Moving Ware housing SCM is a business network covering from buying, making, moving, warehousing to selling

7. Traditional SCM

10. The Three Ts

11. Transactional Efficiency Critical Data to improve : Multiple handling Transit damage Process delays Excess freight Delays End-to-end cycle-time Warehouse fees Inventory turns Yield Late Deliveries Perceived Value Intrinsic Value The Supply Chain “Iceberg”

12. Supply Chain Decisions OPERATIONAL TACTICAL STRATEGIC Procurement Distribution Manufacturing Logistics

18. Service Level & Inv. Costs Costs Opportunity cost curve. Total costs A Inventory + Service costs. Low Service levels High I Interpretation:  At low service levels, costs due to lost opportunities are very high.  When service levels are raised, inventory + service costs increase marginally but costs due to lost opportunities come down drastically.  Enlarged view of portion marked at “A” is shown in the next graph for further explanation.

20. Scientific Replenishment System

21. The Use of Safety Stock Inventory on Hand Inventory on Hand Stock out Time Stock out is avoided Time Safety Stock

31. IMPROVED STORAGE SYSTEM EXERCISE

35. Logistics Management 'Logistics is the process of strategically managing the procurement, movement and storage of materials (and related information flows) through the organisation and its marketing channels

37. CARRIER SELECTION OUTSOURCING Vs. OWN VEHICLE VEHICLE TYPE ( SIZE ) CUSTOMERS PER VEHICLE & TRIPS PER VEHICLE ( ROUTING )

39. Your responsibility is to assist in defining Right Product in the Right Quantity from the Right Source to the Right Destination in the Right Condition at the Right Time for the Right Cost.

40. Transport Costs Fixed cost Variable cost Vehicle cost ( Depreciation ) License fee Insurance cost Driver salary Interest cost Road tax Administration Cost Labour cost ( Laoding & Unloading ) Fuel, Consumables & Oil cost

42. Routing & Scheduling In Transportation This refers to the selection of customers to be visited by the particular vehicle and the sequence in which they will be visited. For the companies to be successful, they have to do the routing and scheduling in such a way that they reduce the cost of transportation at the same time make the deliveries fast and meet the promised level of responsiveness to the customers. To achieve this, the objective is to minimize cost by Decreasing the number of vehicles, Reducing total distance traveled, Reducing total travel time & Reducing service failures ( delays )

45. Assign Customers to Vehicles or Routes Select the route with highest savings and combine the 2 routes if the total load is less than the permitted load. Keep combining this way to get the route plan. Sequence Customers within Routes The goal here is to minimize the distance each vehicle must travel. The procedure for this is as follows: Farthest Insert : Given, a vehicle trip for each customer, evaluate the minimum increase in length if this customer is inserted at a suitable point in the trip and insert the customer with the largest minimum increase to obtain the new trip. Nearest Insert : Given, a vehicle trip for each customer, evaluate the minimum increase in length if this customer is inserted at a suitable point in the trip and insert the customer with the smallest minimum increase to obtain the new trip.

46. Routing & Scheduling Exercise

48. SCM Key Performance Measures FMFO Deliveries during the month FMFO Adherence % ge = ---------------------------------------------------------- Total deliveries made during the month. Orders Delivered On Time & Full Commitment % ge ( OTIF ) = ----------------------------------------------------- Orders Received in a month Transport cost + Labour Cost + storage cost SCM COST / TN = --------------------------------------------------------------------- Total sales

51. Bullwhip Effect

52. Bullwhip Effect