ACHINTYA DAS

SUPPLY CHAIN MANAGEMENT

Value Chain

Supply side- raw materials, inbound logistics and production processes

Demand side- outbound logistics, marketing and sales.

SCM

WHAT IS SUPPLY CHAIN MANAGEMENT

“Is the strategic management of activities involved in the acquisition and conversion of materials to finished products delivered to the customer"

SupplierManagement

Schedule /Resources Conversion

Stock Deployment Delivery

CustomerManagement

Leads to Business Process Integration

Material Flow

Information Flow

Supply chain is the system by which organizations source, make and deliver their products or services, according to market demand.

Supply chain management operations and decisions are ultimately triggered by demand signals at the ultimate consumer level.

Supply chain as defined is extends from suppliers to customers.

Typical Supply Chain Structure

Information Flow

Raw Materials

CUSTOMERFACTORY W/HOUSE DEPOTS

SUPPLIER

Finished Goods

CORPORATE OFFICE

SUPPLY CHAIN INCLUDES :

MATERIAL FLOWS

INFORMATION FLOWS

FINANCIAL FLOWS

SUPPLY CHAIN MANAGEMENT IS FACILITATED BY :

PROCESSES

STRUCTURE

TECHNOLOGY

Supply chain serves two functions:

Physical

Market mediation

Supply chain objectives may differ from situation to situation.

For functional products, cost efficiency is the critical factor.

For innovative products, responsiveness is

the important factor.

A Picture is better than 1000 words!

SUPPLY SIDE DEMAND SIDE

EFFORT TO MATCH SUPPLY & DEMAND FOR HIGHER PROFITABILITITS

The rightProduct

HigherProfits

The rightTime

The rightCustomer

The rightQuantity

The rightStore

The rightPrice

=++ ++ +

MAIN OBJECTIVE

SUPPLY CHAIN DRIVERS

• Why sudden interest? Mainly due to the following….

– Demanding Customers

– Shrinking of Product life cycles

– Rapid Growth of Product offerings

– Growing Retailer power in some cases

– Doctrine/ Rules of core competency

– Emergence of specialized logistics providers

– Globalization Market and Products

– Change in Information technology

SUPPLY CHAIN ELEMENTS

• Supply Chain Design• Resource Acquisition• Long Term Planning ( 1 Year ++)

Strategic

• Production/ Distribution Planning• Resource Allocation• Medium Term Planning (Qtrly,Monthly)

Tactical

• Shipment/ Despatch Scheduling• Resource Scheduling• Short Term Planning (Daily/ Weekly,/ Monthly)

Operational

Supply Chain Goals

Efficient supply chain management must result in tangible business improvements.

It is characterized by a sharp focus on

Revenue growth

Better asset utilization

Cost reduction.

Reduce Overall Cycle Time : Improve Response

Supply Chain Management

Underlying Principles

Compression

Conformance

Co-operation

Communication

(Planning/Manufacturing/Supply)

(Forecasts/Plans/Distribution) (Cross -Functional)

(Real Time Data)

Changing Model

• Functional vs Process

• Products vs Customers

• Revenues vs Performance

• Inventory vs Information

• Transactions vs Relationships

Critical Success Factors today

• Cross functional management and planning skills

• Ability to define, measure and manage service requirements by market segment

• Information systems• Relationship management and win win

orientation

PUTTING IN PLACE EFFECTIVE SUPPLY CHAIN

Supply Chain as an efficient Customer satisfying process

Effectiveness of the whole domain of Supply Chain is more important than the efficiency of each individual department.

. The steps involved

Step1- Designing the supply chain

Determine the supply chain network

Identify the levels of service required

Step 2 - Optimizing the Supply Chain Determine pathways from Suppliers to

the End Customer Customer markets to Distribution centers Distribution centers to production plants Raw material sources to production plants Identify constraints at vendors, transporters,

plants and distribution centers Get the big picture Plan the procurement, production and

distribution of product groups rather than individual products in large time periods- quarters or years

Step 3- Material flow planning

• Determine the exact flow and timing of materials

• Arrive at decisions by working back from the projected demand through the supply chain to the raw material resources

• Techniques - ERP

Step 4 - Transaction processing and

short term scheduling

• Customer orders arrive at random

• This is a day to day accounting system which tracks and schedules every order to meet customer demand

• Order entry, order fulfillment and physical replenishment

Flows in a Supply Chain

Customer

Material

Information

Funds

The flows resemble a chain reaction.

Supplier

Information flows in Supply Chain Management

• Information is overriding element• Need for databases• Master files: Information about customers, products,

materials, suppliers, transportation, production and distribution data- do not require frequent processing

• Status files- heart of transaction processing- track orders and infrastructure status- updated daily.

• Essentially using the same information to make all plans right from structuring the network to processing every day supply chain tasks.

THE VIRTUAL VALUE CHAIN

The value chain connects a company’s supply side with its demand side.

Traditionally information has been a supporting function.

Information however can be managed far more creatively.

There are various stages of using value added information processes.

Visibility : See physical operations more effectively through information. Information can be used for effective coordination of value chain activities.

Mirroring capability : In this stage, virtual activities are substituted for physical ones. A parallel value chain is created.

New customer relationships : The company can draw on the flow of information in the virtual value chain to deliver value to customers in new ways.

Dealer / Customer Management

Conventional functions

Inventory ownership and management

Sales and technical support

Order handling

Credit Management

Issues in customer management

Penetration vs Spread

Concentration is necessary to commit the necessary resources for true customer integration

Depth of customer contact R&D - sharing information vs developing new products together

Logistics - Pros and cons of methods of transportation vs reengineering the logistics process

Implementation: Points to keep in mind

Recognize the difficulty of change. Prepare a blueprint for change that maps

linkages among initiatives. Assess the entire supply chain from supplier

relationships to internal operations to the market place, including customers, competitors and industry as a whole.

IS THE SUPPLY CHAIN WORKING?

Does our manufacturing strategy increase product line flexibility while continuing to drive down overall production costs ?

When was the last time we measured lost orders/ sales to end customers ?

Do we have an efficient system to get MIS data from Customers/ Dealers ?

Are we testing our products with end Customers ? Do we use the resulting data to adjust our forecasting

and supply positions ? Is the ratio of returned orders to sales increasing ?

Summary

• Segmentation of customers based on Market/ Service needs

• Customization of Logistics Network

• Listen to signals of market demand and plan accordingly.

• Differentiate product close to the customer

• Identify Logistics Source strategically

• Develop a supply chain wide technology strategy

• Accept channel spanning performance measures

Thank You