supply chain management

Improve operations (Efficiency Vs. Responsiveness)Complex Taxation Structure in IndiaIncreasing levels of outsourcingDecreasing transportation costs (increasing Fuel Price in India)Competitive pressures Increasing globalizationIncreasing importance of e-commerceManage inventories

Need for Today

1Lokesh Vijayvargy, Jaipuria, Jaipur04/12/23

Local trains are life line of Mumbai as well as SCM is life line of Industry today

04/12/23 Lokesh Vijayvargy, Jaipuria, Jaipur 2

Supply Chain

Management


Supply Chain Management: Success

Stories

Dell: Inventory turn-over ratio of 58.7 compared to industry average of 12

Wal-Mart: Inventory turn-over ratio of 9.9 compared to industry average of 5.5

Zara Corporation: Lead-time from new product to stores is 15 to 20 days compared to industry average of six months.


Supply Chain Management: Horror

StoriesCisco: Cisco wrote off 2.2 $ billion worth of inventory in May 2001. Biggest write-off in history.Sony: PlayStation II–a lost opportunity

SONY could supply only 25% of the potential demand for Christmas marketNintendo Wii Game Console : Shortage expected in year 2007

Kmart Launched supply chain initiative in May 2000 worth $1.4 billion in software and services. In 2001-02, announced that it was abandoning most of the software purchased and taking $130 million write-offNike- i2 Technology Controversy: Lost $100 in sales in last quarter of 2000 i2 Technologies was blamed. “ This is what we get for our $400 million”—Nike ChairmanWal-Mart: RFID Initiative

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Complexity of Amul supply chain

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Salient features of SCMSCM takes into consideration every facility that has an impact on cost and plays a role in making the product conform to customer requirements.It takes into account the suppliers’ suppliers and the customers’ customers.

It is a system approach, which tries to minimize the system wide cost and not only emphasizing on minimization of transportation cost or reducing inventories. SCM integrates the activities of many levels, from the strategic level through the tactical to operational level.The concept of SCM is complementary to logistics management and both place emphasis on integration of different components. A supply chain is a network that includes vendors of raw materials, plants transform those materials into useful products, and distribution centers to those products to customers.


Supply Chain

A supply chain consists of all stages involved, directly

or indirectly, in fulfilling a customer request.

Its existence is to satisfy customer needs, in the

process generating profits for itself.

It not only includes the manufacturer and suppliers,

but also transporters, warehouses, retailers, and

customers themselves.


Supply Chain Management: A Pictorial Representation

C1

C2

C3

C4

C5

C6

VENDOR INBOUND TRANSPORTATION

PLANTS INTERFACILITY TRANSPORTATION

DISTRIBUTIONCENTERS

OUTBOUNDTRANSPORTATION

CUSTOMERS


Supply

Sources:plantsvendorsports

RegionalWarehouses:stocking points

Field Warehouses:stockingpoints

Customers,demandcenterssinks

Production/purchase costs

Inventory &warehousing costs

Transportation costs Inventory &

warehousing costs

Transportation costs


Types of Supply Chain

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Evolution of SCM

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Supply Chain Challenges for the Indian FMCG Sector

Managing Availability in the Complex Distribution Set up Working with Smaller Pack SizesEntry of National Players in the Traditional Fresh Products Sector Dealing with a Complex Taxation Structure Opportunistic Games Played by the Distribution ChannelInfrastructureEmergence of Third-party Logistics Provider Emergence of Modern Retail ChainsReservation for Small-scale Sector

Example 4

In 1979, Kmart was one of the leading companies in the retail industry, with 1,891 stores and average revenues per store of $7.25 million. At that time Wal-Mart was a small niche retailer in the South with only 229 stores and average revenues about half those of Kmart stores. In 10 years Wal-Mart had transformed itself; in 1992 it had the highest sales per square foot and the highest inventory turnover and operating profit of any discount retailer. Today Wal-Mart is the largest and highest-profit retailer in the world. In fact, as of 1999, Wal-Mart accounted for nearly 5 percent of U.S. retail spending. How did Wal-Mart do it?


Wal-Mart's goal was simply to provide customers with access to goods when and where they want them and to develop cost structures that enable competitive pricing. The key to achieving this goal was to make the way the company replenishes inventory the centerpiece of its strategy. This was done by using a logistics technique known as cross-docking. In this strategy, goods are continuously delivered to Wal-Mart's warehouses, from where they are dispatched to stores without ever sitting in inventory. This strategy reduced Wal-Mart's cost of sales significantly and made it possible to offer everyday low prices to their customers


Information, product, service, financial and knowledge flows

Materials

En

d C

on

sum

ers

Capacity, information, core competencies, capital, and human resource constraints

Supplier Network

Market Distribution

Procurement

Manufacturing

Integrated Enterprise

Distribution Network

Relationship Management

Generalized Supply Chain Model

Material FlowInformation Flow


Flows in a Supply Chain

Customer

Information

Product

Funds


Stevans Model of Supply Chain Integration

Stevans have provided a simple model to understand supply-chain integration. It involves transforming enterprise from an inward looking (i.e., whatever the enterprise makes is being sold) to a flexible outward looking (i.e., producing whatever the market wants it to sell) in an overall efficient manner. The transformation can be performed in an effective manner through a series of phased steps. These steps involve the recognition of technological, organizational and attitudinal attributes (see in Fig.). Integration of the Supply Chain is a four stage process involving


Stage Objective Functioning part

Stage I Base line Understanding of material flow from purchasing to distribution.

Stage II Functional Integration

Understanding the functionality of material management, manufacturing management and distribution.

Stage III Internal Integration

Internal integration of material management, manufacturing management and distribution.

Stage IV External Integration

Integration of suppliers, internal supply chain and customers.


Stage I : Base Line

Stage I is a situation in which company approaches supply chain tasks in discrete decisions with responsibility lodged in each of the task centers. The result is usually a lack of control across the supply chain function because of organizational boundaries preventing the coordinated decisions from achieving an overall customer service objective.


Stage II : Functional Integration

Functional integration of the inward flow of goods through materials management, manufacturing management and distribution.

The emphasis is usually on cost reduction rather than performance achievement;


Stage 3 accepts the necessity of managing the flow of goods to the customer by integrating the internal activities.

At this stage integrated planning is achieved by using systems such as distribution requirements planning (DRP), JIT, manufacturing techniques, etc. IT becomes an effective enabler in this process.

Stage III : Internal Integration


Stage IV : External Integration

Stage 4 extends the integration to external activities . In doing so the company becomes customer orientated by linking customer’s procurement activities with its own procurement and marketing activities.


Purchasing

Manufacturing

Distribution

SUPPLIERS

Sales

Integrated Supply Chain Approach

Looks at the entire chainGlobal rather than local focusIntegrated rather than fragmented approach

CUSTOMERS


6 key elements to a supply chain

Production

Supply

Inventory

Location

Transportation

Information


Select Examples of SC in India

Type of Industry Select ExamplesSelect Examples

Retail Shopper Stop, Life Style, west side, Shopper Stop, Life Style, west side, Big Bazar, Wal MartBig Bazar, Wal Mart

Automobile Maruti, Hero-Honda, Telco, Mahindra Maruti, Hero-Honda, Telco, Mahindra & Mahindra, Totoya& Mahindra, Totoya

Chemicals/Paints Reliance, Asian Paints, Goodlass Nerolac

Consumer Durables Samsung, LG, Godrej, BPL, Sony

Fast Moving Consumer Goods Hindustan Lever, Proctor & Gamble, Coca-Cola, Pepsi,

Food Godrej, Cadbury, Parle, Amul, Dabur

Computers Wipro, HCL, IBM

Newspaper Bennett Coleman & Co(Times of India,) HT Media Ltd (Hindustan Times) 26Lokesh Vijayvargy, Jaipuria, Jaipur04/12/23

Process View of a Supply Chain

Cycle view: processes in a supply chain are divided into a series of cycles, each performed at the interfaces between two successive supply chain stagesPush/pull view: processes in a supply chain are divided into two categories depending on whether they are executed in response to a customer order (pull) or in anticipation of a customer order (push)Pull process as reactive processPush process as speculative process


A cycle-based process view for supply chain operationsCycles: A sequence of steps characterizingthe transactions that take places among two successive stages of the supply chain

Stages

Customer

Customer Order Cycle

Replenishment Cycle

Manufacturing Cycle

Procurement Cycle

Retailer

Distributor

Manufacturer

Supplier


Cycle View of a Supply Chain

Each cycle occurs at the interface between two successive stages

Customer order cycle (customer-retailer)Replenishment cycle (retailer-distributor)Manufacturing cycle (distributor-manufacturer)Procurement cycle (manufacturer-supplier)

Figure (see previous slide)Cycle view clearly defines processes involved and the owners of each process. Specifies the roles and responsibilities of each member and the desired outcome of each process.


Benefits of SCM

Reduce uncertainty along the chain

Proper inventory levels in the chain

Minimize delays

Eliminate rush (unplanned) activities

Provide superb customer service

Major contributor of success (ever survival)


Supply chain management problems

Distribution Network Configuration: Number and location of suppliers, production facilities, distribution centers, warehouses and customers. Distribution Strategy: Centralized versus decentralized, direct shipment, cross docking, pull or push strategies, third party logistics.

Information: Integrate systems and processes through the supply chain to share valuable information, including demand signals, forecasts, inventory and transportation.

Inventory Management: Quantity and location of inventory including raw materials, work-in-process and finished goods.


supply chain management

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