OBJECTIVES TO SUPPLY CHAIN MANAGEMENT

PRESENTED BY, ABEY THACHIL (R#111

BLESSON JOSEPH THOMASDENNY J OTTARACKALJIBIN BABU

1

What is a Supply Chain?

A supply chain consists of the flow of products and services from/to:

--Raw materials manufacturers--Intermediate products manufacturers--End product manufacturers--Wholesalers and distributors--Retailers and, --End customers

Connected by agents, transportation and storage activities, and integrated through sharing of information, planning, and processing activities.

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3

A Generic Supply Chain

End product manufacturer

Wholesalers,

distributorsIntermediate

component mfgs.

Raw material

suppliers

Retailers

End

customers

Product & service flow

Information and planning

Typical Supply Chain for a Manufacturer

Supplier

Supplier

Supplier

Storage} Mfg. Storage Dist. Retailer Customer

Typical Supply Chain for a Service

Supplier

Supplier

} Storage Service Customer

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What is Supply Chain Management?

Here are two definitions:

The design and management of seamless, value-added process across organizational boundaries to meet the real needs of the end customer

-- Institute for Supply Management

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

-- The Supply Chain Council

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Importance of Supply Chain Management

* Firms have discovered value-enhancing and long term benefits

* Who benefits most? Firms with: - Large inventories

- Large number of suppliers

- Complex products

- Customers with large purchasing budgets

* Benefits

- Lower purchasing/inventory costs, higher quality/customer service

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Importance of Supply Chain Mgt. –Cont.

* Cost savings and better coordination of resources are reasons to employ Supply Chain Management

-- Bullwhip Effect- the magnification of safety stocks and costs based on separate forecasts and uncoordinated planning and sharing of information along the supply chain

* Reducing the bullwhip effect occurs through:-- Process integration- Interdependent activities can lead to improved quality, reduced cycle time, better production methods, better forecasts, less safety stock, etc.

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Important Elements of SCM

Purchasing- Supplier alliances, supplier management, strategic sourcing

Operations- Demand management, MRP, ERP, JIT, TQM

Distribution- Transportation management, customer relationship management, network design, service response logistics

Integration- Coordination/Integration activities, global integration problems, performance measurement

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Purchasing:

•Long term relationships•Supplier management- improved performance through-

-- Supplier evaluation (determining supplier capabilities and performance)

-- Supplier certification (third party or internal certification to assure product quality and service compliance)

•Strategic partnerships- successful and trusting, long-term relationships with top-performing suppliers

Operations:-- Demand management- match demand to available capacity

-- Linking buyers & suppliers via MRP and ERP systems

-- Use JIT to improve the “pull” of materials to reduce inventory levels

-- Employ TQM to improve quality compliance among buyers and suppliers

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Distribution:-- Transportation management- tradeoff decisions between cost & timing of delivery/customer service via trucks, rail, water & air

-- Customer relationship management- strategies to ensure deliveries, resolve complaints, improve communications, & determine service requirements

-- Network design- creating distribution networks based on tradeoff decisions between cost & sophistication of distribution system .

Integration:-- Supply Chain Integration- when supply chain participants work for common goals. Requires intrafirm functional integration. Based on efforts to change attitudes & adversarial relationships

-- Global Supply Chains- advantages that accrue from sourcing from larger global market e.g., lower cost & higher quality suppliers. May involve operating exposure, which is risk found in foreign settings

-- Supply Chain Performance Measurement- Crucial for firms to know if procedures are working

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Supply Chain VariabilityV

olu

me

s

Time

Source: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998

ActualConsumerDemand

ActualConsumerDemandRetailer Warehouse

to Shop

Retailer Warehouseto ShopRetailer OrdersRetailer Orders

Production PlanProduction Plan

Manufacturer Forecastof Sales

Manufacturer Forecastof Sales

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What Management Gets...

Vo

lum

es

Time

Source: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998

ConsumerDemand

ConsumerDemand

Production PlanProduction Plan

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What Management Wants…

Vo

lum

es

Time

Source: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998

ConsumerDemand

ConsumerDemand

Production PlanProduction Plan

Objectives of Supply Chain Management?

Supply chain management is concerned with the efficient integration of suppliers, factories, warehouses and stores so that merchandise is produced and distributed:– In the right quantities– To the right locations – At the right time

In order to– Minimize total system cost– Satisfy customer service requirements–-face global competition–Improve standardization

THANK

YOU!!