Supply Chain Management Presented By

Partha Kumar DasHead Of SCM PRAN Group

Topics• Key Concept • SCM in Different Private sector• Why Supply Chain Management• Profit leverage by SCM • 3 Cases • Gartner Supply Chain Top 25 for 2016• Career in Supply Chain Management• Supportive Courses on Supply Chain

Key Concept What is Supply Chain Management?Supply chain Management encompass the

Planning and Management of all activities involve in sourcing, Purchase, Procurement, Conversion and Logistic management.

Cycle of Supply Chain Plan Plan for Managing all resources that go

toward meeting customers demand.

Source & Buy Source the reliable suppliers.

Make Manufacturing Stage

Deliver Known as Logistics

Return or Service

Most problematic step in Supply Chain. Manage the defective and excess product and support customers without these effects.

Goal Of Supply Chain Management.The goal of SCM is to create a Fast, Efficient

and Low cost network of Business Relationship to get a company’s product from concept to Market

Customer SatisfactionIncrease Profitability

Year to Year shifting of SCM

1960- Inventory Management, Cost control1970-MRP(Material Requirement Planning) &

BOM – Operations planning 1980-MRP II(Manufacturing Resource

Planning), JIT- Materials Management, logistics1990-SCM-ERP- ‘Integrated’ Purchasing,

Financial, Manufacturing, Order entry 2000- Optimize ‘Value network’ with real time

decision support and collaborative network.

Elements of Supply Chain Management

Elements Typical Issues Customers What Customers wants

Forecasting Predicting demand quantity and Demand timing

Sourcing Find the best source

Purchasing Evaluating Suppliers and Operation for forward

Processing Mgf. Quality control etc.

Delivery Quantity, delivery

Four Major Components of SCMProduction – Why, What, where, When, How much. Inventory – How much. Distribution – When, How. Payments – How, When.

Inter Organization Supply Chain Flows

SCM in different Private Sector There are three types of Private Sector

-- Small & medium sized Enterprise -- Local large Enterprise -- Multinational

SCM in SME Operating by Traditional Way Single Decision Maker In most of the cases owner is the key decision

maker No separate department Operating by Accounts, Finance, Productions

or Stores

SCM in Local Large enterprise Operating by Organize way. Operation starts from Plan and End to

Purchase and Procurement.Decision maker Managerial hierarchy. In Most of the cases using Established

Software like ERP( Enterprise resource planning), SAP(Systems, Applications, Products)

SCM In Multinationals

Well Organized Practice of Global SCM Process. Research on new terms of SCM. Use updated process flow.Limited flexibility.

Why Supply Chain Management?

Competition today is not between individual Companies but between Supply Chains.

Ensure Quality Key objective of P&S is to ensure the quality

product to the customer/Consumer considering the below points………..

o Functionality o Flexibility and Adaptability o Durability o Uniqueness

In time Service

Efficient SCM speed up the delivery process and service to ensure the uninterrupted chain between the customer/Consumer demand vs. delivery.

-- Forecasting-- Demand Vs Efficient Order Plan-- Delivery Plan -- Logistics Plan

System Efficiency Supply Chain can highly utilize the capitals by optimizing

the inventory and other correlated systems.

-- Reducing the lead time-- Reducing the high inventory -- Reducing Holding Cost-- Develop the storage system -- Offering the fresh products to consumer -- S & OP Planning -- Risk Management -- Vendor Management

Cost control Supply Chain plays the key rule to minimize the

cost and maximize the profit for any organization.

-- Reducing the TCO -- Reducing the Operational cost-- Outsourcing -- Cut the Non Value process cost -- Negotiation

Profit Leverage by SCM• Total savings on Supply chain process directly

add to the net profit.• Supply chain works on avg. 60-70% cost area

in Manufacturing company where there are various opportunity to minimize the cost.

Case—1 Company X -- In flow • Sales--- BDT 2,00,000.00 -- Out Flow • Materials cost—BDT 1,40,000.00• Salaries & Wages --- BDT 40,000.00• Overhead etc. --- BDT 10,000.00 -- Profit --- BDT 10,000.00 ( 5% NP)-- Now company X decided to increase the NP(5%) What is the easiest solution from above? • Increase the selling price 5% ----Very difficult• Make sales double----extremely difficult; Capacity constraint• Decrease Salary 25% --- Also Impossible • Decrease Materials cost 7.2%----which is the ultimate solution, improving

Negotiation; Vendor Management; Cut the cost on Transportation; various efficient SCM tactics.

• 1% of Cost reduction means the 20% of Sales increase.

Case --2

On below Chart reducing 1% Materials cost profitability increase 10%.

Materials Cost 60%

Salaries and Wages 20%

Overhead and Others

cost10%

Profit 10%

Materials Cost 59%

Salaries and Wages

20%

Overhead and Others cost

10%

Profit 11%

Reducing 1% Materials cost here increase 10% profit

Case—3How a business can run without input cost.

Cash Flow

Materials Purchase

Production

Sales and Delivery

Purchase 01.10.16 30 Credit time Payment 01.11.16

Input to Production 05.10.16 Output 07.10.16

Sales 03.10.16 Delivery 10.10.16

Cash In Flow by 15.10.16Cash is Ready for next cycle

With Profit

Gartner Supply Chain Top 25 for 2016Rank Company

Peer Opinion1(18

5 voters)-25%

Gartner Opinion1(38 voters)-25%

Three-Year Weighted ROA-

20%

Inventory Turns-10%

Three-Year Weighted Revenue

Growth-10%

CSR Component Score5-10%

Composite Score

1 Unilever 1841 632 10.80% 6.9 3.60% 10 5.842 McDonald's 1754 493 13.20% 156 -4.00% 3 5.543 Amazon 3356 582 0.50% 8.4 20.40% 0 5.344 Intel 1112 496 11.40% 4.3 1.10% 9 4.625 H&M 833 189 25.30% 3.5 16.30% 9 4.56 Inditex 1212 283 16.70% 3.9 11.20% 9 4.427 Cisco Systems 1158 510 8.20% 11.2 2.30% 5 4.218 Samsung Electronics 1313 303 8.60% 14.8 -2.40% 9 3.959 The Coca-Cola Co. 1459 253 8.30% 5.7 -2.90% 9 3.6910 Nestlé 1251 257 8.90% 5.2 -1.10% 10 3.6811 Nike 1393 205 14.70% 3.9 9.70% 4 3.5812 Starbucks 1069 188 16.90% 6.8 13.80% 4 3.5513 Colgate-Palmolive 880 323 15.10% 5.2 -3.50% 3 3.4314 3M 784 163 15.00% 4.2 -0.90% 9 3.315 PepsiCo 931 347 8.50% 8.6 -2.30% 4 3.2316 Walmart 1512 232 7.90% 7.7 0.60% 3 3.0617 HP 390 266 4.60% 12.1 -5.20% 10 2.8718 Schneider Electric 392 259 4.30% 5.1 4.90% 10 2.819 L'Oréal 888 159 11.40% 3 7.00% 4 2.720 BASF 492 199 6.50% 5 -2.00% 10 2.721 Johnson & Johnson 950 165 11.60% 2.6 -0.40% 4 2.6522 BMW 778 128 3.80% 6 8.80% 10 2.6123 GlaxoSmithKline 361 98 12.60% 1.9 -1.90% 9 2.5124 Kimberly-Clark 634 240 9.00% 6.3 -2.50% 3 2.4825 Lenovo Group 508 217 3.60% 13.3 17.00% 4 2.43

Notes:1. Gartner Opinion and Peer Opinion: Based on each panel's forced-rank ordering against the definition of "DDVN orchestrator."2. ROA: ((2015 net income/2015 total assets) * 50%) + ((2014 net income/2014 total assets) * 30%) + ((2013 net income/2013 total assets) * 20%).3. Inventory Turns: 2015 cost of goods sold/2015 quarterly average inventory.4. Revenue Growth: ((change in revenue 2015-2014) * 50%) + ((change in revenue 2014-2013) * 30%) + ((change in revenue 2013-2012) * 20%).5. CSR Component Score: Index of third-party corporate social responsibility measures of commitment, transparency and performance.6. Composite Score: (Peer Opinion * 25%) + (Gartner Research Opinion * 25%) + (ROA * 20%) + (Inventory Turns * 10%) + (Revenue Growth * 10%) + (CSR Component Score * 10%).

Career in Supply Chain Management Near Future SCM Professionals will hold the

leading position in each organization. Each Business core competencies depends on………

o Product differentiationo Lower cost to compete the market o Ensure high quality products to consumerso In time delivery as per customer requirements o Take liabilities after sales. Means Service Above factors can be achieved by a efficient SCM

Department.

Supportive Courses on Supply Chain MLS-Modular learning System --by ITC—WTO– UN– DCCI Bangladesh --The Certified Professional in Supply Management® (CPSM®)CIPS-Chartered Institute of Procurement and

Supply -- By CIPS-BRAC University CSCM - Certified Supply Chain Manager-- Certificate by ISCEA, USA

Thanks