Supply Chain Management: A Project ON

SUPPLY CHAIN MANAGEMENT
A PROJECT REPORT ON
SUBMITTED BY
Vikas D. Tater
T.Y.B.M.S. [Semester V]
K. J SOMAIYA COLLEGE OF ARTS & COMMERCE

VIDYAVIHAR (WEST)
SUBMITTED TO
UNIVERSITY OF MUMBAI
ACADEMIC YEAR
2009 - 2010
PROJECT CO-ORDINATOR
MR. ANAND DESHPANDE
DATE OF SUBMISSION
8TH OCTOBER, 2009’
1
DECLARATION
I, Mr. Vikas D. Tater , of K.J Somaiya College Of Arts & Commerce of

TYBMS [Semester V] hereby declare that I have completed my project, titled
‘Supply Chain Management’ in the Academic Year 2009-2010. The
information submitted herein is true and original to the best of my
knowledge.
________________________
Signature of Student
[ Vikas D. Tater]
2
CERTIFICATE
I, MR. ANAND DESHPANDE, hereby certify that Mr. Vikas D. Tater of

K.J Somaiya college of Arts & Commerce of TYBMS [Semester V] has
completed her project, titled ‘Supply Chain Management’ in the academic year
2009-2010. The information submitted herein is true and original to the best of my
knowledge.
_________________ ______________________ __________________

Signature of signature of signature of project
Principal B.M.S Co-ordinator co-ordinator
[Dr. Ms Sudha Vyas] [Dilip Sir] [Anand Deshpande]
3
ACKNOWLEDGEMENTS
My grateful thanks to my project guide Mr. ANAND DESHPANDE

and for his excellent and encouraging support and guidance throughout the
project.
I would like to take the opportunity to thank my classmates for their

ongoing support. I would specially thank all the women with whom I
interacted, for providing the adequate support for the successful completion
of the project. I would also like to thank my friends for their help during the
project.
I would also like to offer my gratitude to our coordinator

Prof DILIP SIR who was present there to support me throughout the
project.
I would also like to acknowledge the different websites, which helped

me in completing this project.
For this project I have referred a number of books of this subject. I

express my gratitude to all these authors, too numerous to acknowledge.
4
EXECUTIVE SUMMARY
5
SECTIO TOPICS PAGE

N NO
1 INTRODUCTION 8
2 THE EVOLUTION
3 WHAT IS SUPPLY CHAIN?

4 WHAT IS SUPPLY CHAIN MANAGEMENT
5 SUPPLY CHAIN OPTIMIZATION
6 SCOPE OF SUPPLY CHAIN
7 SCM OBJECTIVES
8
PRINCIPLES OF SUPPLY CHAIN MANAGEMENT
9
IMPORTANCE OF SUPPLY CHAIN MANAGEMENT
10 BENEFITS OF SUPPLY CHAIN
11 SCM PROCESS
12 PROCESS VIEW OF THE SUPPLY CHAIN
13 PUSH-PULL VIEW OF SUPPLY CHAIN
14 SUPPLY CHAIN FLOWS

15 DECISION PHASES IN A SUPPLY CHAIN
16 SUPPLY CHAIN STRATEGY OR DESIGN
17 SUPPLY CHAIN PLANNING
18 SUPPLY CHAIN OBSTACLES/CHALLENGES
19 SUPPLY CHAIN DRIVERS
20 THE BULL WHIP EFFECT
21 CAUSES OF THE BULLWHIP EFFECT
22 HOW TO COUNTERACT THE BULLWHIP EFFECT
2 HOW TO REDUCE THE BULLWHIP EFFECT
6
24 CREATING AND MANAGING A LEAN SUPPLY CHAIN?
25 WAYS TO GET A LEAN SUPPLY CHAIN
26 SCOPE OF A SUPPLY CHAIN MANAGER TODAY!
27 SUPPLY CHAIN AND IT
28 THE INTEGRATED SUPPLY CHAIN STRATEGY
29 SUPPLY CHAIN PERFORMANCE METRICS
30 CRITICAL STRATEGY AREAS FOR PURCHASING AND

SUPPLY MANAGEMENT
31 INTEGRATED INFORMATION SYSTEM
32 EARLY INTEGRATION OF SUPPLIERS
33 PERFORMANCE MEASURES
34 CROSS-FUNCTIONAL STRATEGIC TEAM
35 BUYER-SUPPLIER JOINT STRATEGIC PLANNING
36 SUPPLY CHAIN COST MANAGEMENT
37 GLOBALIZE SUPPLY CHAIN
38 CONCLUSION
7
INTRODUCTION
Since the early 1980's, supply chain management has developed rapidly
as companies have been seeking to improve their competitiveness in
respect of cost and service levels, and to attain sustainable growth.
Supply chain management has gained increasing recognition in

business, both as a function in its own right and as a cross-functional
discipline. At the same time, supply chain management has moved from
operational level to broad level within the corporate organization. Never
before the supply had chain management played such an important role
in the corporate strategy of many companies as it is today. This
development has led to a much broader scope in supply chain
management in the today’s world as compared to that of the 1980's.
With the logistics industry becoming more crucial as its relevance ever
increasing it moved into new areas, involved in outsourcing projects and
design and implements supply chain management strategies and enable
enormous increase in output. Given the growing importance of supply
chain management, one has to determine how the calculation of
transport and logistics costs has changed over the last decades as a
consequence of improved supply chain management and the increasing
significance of supply chain management.
The concept of Supply Chain Management has recently stepped into the
limelight of corporate professionals and academia. However, its roots can be
traced with the evolution of trade itself. Evidences show that supply chains
8
were present right from the time when mankind understood the need of
merchandising and distribution.
In fact now one of the strategies is to choke all the supply feeder lines,
which either harbour or encourage terrorism of any variety. This was
referred to as 'Operation Endurance Freedom' in the recent times.
We can characterize the significant events that reflect the evolution of

the supply chain management in a chronological manner. However, it is
to be observed that the impact of each event on Supply Chain
Management (SCM) is varied. Change can be implemented easily when
tough times reign. Companies in India have been looking at ways of cutting
costs and improving process efficiencies, in their quest to become globally
competitive. One such initiative is Supply Chain Management (SCM). SCM
recognizes that distinct functions like Purchases, Inventory Management,
Distribution and Production Planning work best when integrated.
Supply Chain Management offers, at the least, reduction in costs across

functions, better planning for purchase and production, and much more
efficient use of capital. It also offers a 13% of India’s GDP-opportunity for a
variety of services - trucking, warehousing, IT, personnel, ancillaries and a
host of others.
Today all the four key elements of SCM –materials, time, money and
information- are being tackled to squeeze out the maximum possible
savings. Almost every leading company in India now has an SCM drive in
place. E.g. in HLL, Chairman M. S. Banga considers SCM as one of the key
factors contributing the bottom line and enabling growth of the power
brands.
9
THE EVOLUTION
The evolution of the SCM has moved from disparate functions of logistics,
transportation, purchasing and supplies and physical distribution to focus on
integration, visibility, cycle time reduction and streamlined channels. The
new integration has a variety of activities such as, Integrated Purchasing
Strategy, Supplier Integration, Buyer-Supplier Partnerships, Supply Base
Management, Strategic Supplier Alliances, Supply Chain Synchronization,
and finally simply SUPPLY CHAIN MANAGEMENT.
The activities of logistics are centuries old as discussed earlier. During

World War II, military forces made effective use of logistics models and
forms of systems analysis to ensure that the required material was at the
right place on time every time. The term logistics is widely used in military
and military type applications even today.
Until about mid 1950's, the field of supply chain management was in a state
of dormancy. The piecemeal and isolated fragmented set of activities was
rampant. Production and manufacturing were given uppermost attention.
The inventory was the responsibility of the marketing, accounting and/or
production areas and order processing was an accounting or sales
responsibility.
SCM is one of the most powerful engines of business transformation

that basically means delivering the right product to the right place at the
right time and at the right price. SCM is the one area wherein much
operational efficiency can be gained, thereby reducing organizations
costs and enhancing customer service. Gradually, the marketing people
10
started giving greater emphasis to distribution, giving rise to physical

distribution management or in today's parlance 'outbound transportation'.
Some of the terms like logistics, inbound logistics, materials management,

physical distribution, supply chain management seem to be used
interchangeably. Very briefly, inbound logistics covers the movement of
material, components and products received from the suppliers. Materials
management describes the material handling part of the movement of the
material and components within the factory or firm.. Finally as of today, it is
the Supply Chain Management that is conceptualized as something even
larger than logistics that links logistics more directly with the user's total
communications network and with the firm's engineering staff.
A supply chain is, in fact, a network of facilities and distribution options that
necessarily performs the functions of procurement and acquisition of
material, processing and transformation of the material into intermediate and
finished tangible products and finally the physical distribution of the
finished tangible products to the customers, whether intermediate or final
ones. As already indicated, supply chains exist in both manufacturing as
well as in service organizations.
Supply Chain Management is a set of approaches utilized to efficiently

integrate suppliers, manufacturers, warehouses, and stores, so that
merchandise is produced and distributed at the right quantities, to the right
locations, and at the right time, in order to minimize system wide cost while
satisfying service level requirements.
11
Table 1 - Chronological Dates
Duration Events in SCM Evolution
The Barter System evolved as an answer to the trading

Ancient Times
requirements. This was the first supply chain.
Caesar made trading posts in East Asia to grow his trade. This
300 BC was the first retailer supplier relationship. Establishment of the
silk route to India.
First known fire and plague insurance offered in Iceland.
1151
House of Taxis operated courier messenger service for the rich

1305
European clients. (A kind of primitive Outsourcing)
Dutch West India Co. formed to trade with America and West
1621 Africa.
(A pseudo third party logistics (3PL) by the Dutch Companies.)
Charles S. Rolls became selling agent for cars made by F.
1904
Henry Royce. (The first traces of outsourcing).
Warren Buffet started investment partnership in Omaha with
money from family and friends and he went on to become a
1956
billionaire.
(An overseas 3PL)
The essence of SCM understood. This first phase is
1960-1975 characterized as an inventory 'push' era that focused primarily
on physical distribution of finished goods.
The earlier approach changed. Companies began migrating
from an inventory push to a customer pull channel as power
1975-1990
began to move the downstream to the customer.
In the last phase, companies realized that the productivity

could be increased significantly by managing relationships;
1980
information and material flow across enterprise borders. This
resulted in the present concept of supply chain management.
12
IBM outsourced almost all of its activities and built a full

1981
computer.
Wal-Mart introduced the concept of Cross Docking and
1985
replaced K-Mart as the leader in retail stores.
Cisco removed itself from the supply chain by providing to the
1985-
customer directly from the vendor.
1990 Computer changed the way business is done.
Internet revolutionized the information pathway and the
1996-
distribution system of the business.
The concept of e-commerce changed the definition of business
1998-
itself.
2000- Currently concepts like t-commerce and digital TV are
beginning to take shape.
The year that was from an Indian supply chain standpoint.
Modern retail chains, like Big Bazaar and Reliance Retail
2007- began making their presence felt in India. Reliance Fresh
stores were sprouting.
As Ratan Tata unveiled the Rs 1 lakh[US$ 2500] car. It was

done by a LEAN supply chain management, reducing cost by
eliminating waste and unemployment.
2008-
GREEN supply chains with minimal or ZERO waste.

MARCH 2008-
Adani and Reliance – Ant and the Grasshopper story!

Reliance abandon its project of setting up agricultural rural
2009- mandis in Punjab, as they ignored supply chain aspect.
Adani had set up a complete end-to-end agricultural supply
chain.
13
Reasons for the Big Breakthrough in the Past 20 years
The breakthrough revolution in the past 20 years is due to the following

differences in the attitude of companies and customers alike.
Earlier Today
14
Companies No two companies at the same Competition at all levels.

level of competition.
The main motive was to Main motive is customer service.

increase production.
Production differentiation very Product differentiated nearer the

early and far from customer. customer.
Reaction approach of Action approach of industries.

industries.
Customer Customer did not care about Customers demand exact

specifications. specifications.
Less market moving powers More power devolved to the

customer.
WHAT IS A SUPPLY CHAIN?

A supply chain is the link that moves products between suppliers,
manufacturers, wholesalers, distributors, retailers and finally consumers. The
network of organizations that are having linkages, both upstream and
downstream, in different processes and activities that produces and delivers
the value in the form of products and services in the hands of ultimate
customer. e.g. a shirt manufacturer is a part of a supply chain that extends
upstream through the weavers of fabrics to the spinners and the
manufacturers of fibers, and downstream through distributors and retailers to
15
the final consumers. Though each of these organizations are dependent on

each other yet traditionally do not closely cooperate with each other.
MANUFACTURERS OF YARNS / FIBERS

UPSTREAM
SUPPLIERS
In simple
WEAVERS OF FABRICS
language at
DOWNSTREAM
SHIRT MANUFACTURERS SUPPLIERS
the material level

RETAILERS
supply chain may be
defined as “Flow of materials through procurement,
CUSTOMERS manufacture,
distribution, sales and disposal.”
WHAT IS SUPPLY CHAIN MANAGEMENT (SCM)?
Supply chain management is a way to supervise the flow of products and

information as they move along the supply chain. Supply chain
management is the combination of art and science that goes into
improving the way your company finds the raw components it needs to
make a product or service, manufactures that product or service and
delivers it to customers. The following are five basic components for
supply chain management.
16
1. Plan - This is the strategic portion of supply chain management.

There is a need of a strategy for managing all the resources that go
toward meeting customer demand for the product or service. A big piece
of planning is developing a set of metrics to monitor the supply chain so
that it is efficient, low cost and delivers high quality and value to
customers.
2. Source - Choose the suppliers that will deliver the goods and services
needed to create product or service. Develop a set of pricing, delivery and
payment processes with suppliers and create metrics for monitoring and
improving the relationships. And put together processes for managing the
17
inventory of goods and services received from suppliers, including receiving

shipments, verifying them, transferring them to your manufacturing facilities
and authorizing supplier payments.
3. Make - This is the manufacturing step. Schedule the activities necessary

for production, testing, packaging and preparation for delivery. As the most
metric-intensive portion of the supply chain, measure quality levels,
production output and worker productivity.
4. Deliver - This is the part that many insiders refer to as "logistics."

Coordinate the receipt of orders from customers, develop a network of
warehouses, pick carriers to get products to customers and set up an
invoicing system to receive payments.
5. Return - The problem part of the supply chain. Create a network for
receiving defective and excess products back from customers and supporting
customers who have problems with delivered products.
The ultimate goal of SCM is to optimize the supply chain, which can not
only reduce inventories, but may also create a higher profit margin for
finished goods by giving customers exactly what they want.
WHAT CAN SCM DO?
A good SCM initiative gives visibility to all the players in the supply chain
so that they are able to react to the order. The moment a retailer receives an
order, the retailer’s supplier also sees it. The supplier checks inventory. If
inventory is low, a manufacturer — also with access to the system —
18
produces more products and ships it to the supplier via a distributor that is
also connected to the system.
Meanwhile the supplier has sent the product to the retail for shipment to
the customer. The customer, in turn, can track the shipment of the order
and perhaps even check inventory to make sure an item is in stock
before ordering. With Web technology, all the players in the chain
simultaneously manage inventory, control-manufacturing schedules and
deliver an order on time to a customer. Also, Supply chain management
projects should also rethink the chain. Most businesses establish their
supply chains around product lines. But today, customer orders touch
multiple product lines and multiple channels of distribution. Modern
supply chains focus on the customer — and on delivering one order at a
time rather than moving one product line at a time. The focus has to be
on filling, delivering and managing inventory for every order that a
customer places. Every order should penetrate the same system that
manages inventory and connects to suppliers and distributors.
SUPPLY CHAIN OPTIMIZATION TO-DO LIST
1. Overproduction
This may take many forms from typically including producing too much
documentation from quotations, requisitions, and purchase orders.
Overproduction can be characterized as producing too much of “a product”
from one process step to another - with the recipient process not requiring as
much as was provided.
2. Transportation
19
Typically characterized by over complex logistics routes and distance

between warehouses and end users.
3. Waiting
High lead times can be a significant problem within supply chains - causing
customer dissatisfaction and work stop in production environments -
reducing lead times can result in both financial and efficiency benefits.
4. Inventory
Too much inventory is a common problem for organizations -ensuring that
the right level of stock is available to meet requirements is a common supply
chain task however overstocking does not utilize company cash effectively
and requires additional overhead to resource.
5. Motion
Ensuring supply chain processes are optimized for the business environment
can often be overlooked; poor planning of organizational layouts can be
frustrating for the employees and dramatically reduce efficiency for example
ensuring put away locations in warehouse environments are conveniently
located, ensuring that workspaces are designed with ergonomics in mind.
6. Over processing
Reducing process steps to a minimum is required to reduce over processing
which can rear its head in many forms - complex controls and authorizations
are common areas for over processing.
7. Defects
20
Finally processes that require rework due to defects are a common cause of
concern - for example Suppliers requiring more information due to poor
technical specifications - incorrect order quantities, or quality issues for
products received in the warehouse are all common forms of defects.
Supply chain improvement plans are often constructed to target all or a

mixture of the above with a view of resources required to deliver the process
output.
Following figure shows a typical Supply Chain:
21
Su
ppliers Manufacturers Distributors Retailers Customers
The goal of supply chain is to move material quickly while maintaining the
lowest possible levels of inventory.
OBJECTIVES OF SUPPLY CHAIN MANAGEMENT ARE:-
 Enhancing Customer Service
 Expanding Sales Revenue
22
 Reducing Inventory Cost
 Improving On-Time Delivery
 Reducing Order to Delivery Cycle Time
 Reducing Lead Time
 Reducing Transportation Cost
 Reducing Warehouse Cost
 Reducing / Rationalize Supplier Base
 Expanding Width / Depth of Distribution
 Better product availability
 Better product reliability
 Best quality
 Flexibility
PRINCIPLES OF SUPPLY CHAIN MANAGEMENT
23
Successful Supply Chain Management is a complex proposition. Within a

broad supply chain management there can be a number of small supply
chains which need to be managed. Each chain is unique for the given player.
The stake for the different players is extremely high making it imperative for
the partners - including suppliers, manufacturers, distributors and customers
behave as if they are part of the same company. This way only they can
enhance performance significantly across the chain.
Having as the main concern a win win situation for all the partners involved
in the chain leads us to recognize and adhere to the following principles of
Supply Chain Management:
a. Customer is the king: Your operations are meaningless if you don't

meet their requirements. In a chain, your customer may be the
supplier to some other customer. As such its requirement may be a
certain quantity of material to be delivered in a particular time period.
Thus begin with the customer.
b. Management of Logistics: It requires great planning and impeccable

execution across the whole chain. It involves determination of
locations for distribution, management of inventory, transportation etc
besides laying down clear performance measurement criteria for
maintaining the standard of services.
c. Customer Management: This needs to be properly organized so that

the customer gets the desired service. It may require aligning all the
24
supply chains under your command so that their combined output

meets the specific demand of the customer.
d. Process integration: It is the most vital part, the fulcrum on which

success of the whole Supply chain exercise rests. For its success it
requires real time information sharing among the chain partners and
planning together for aspects such as forecasts etc. across the chain.
e. Leveraging of Manufacturing and Sourcing: It is not possible for the

firms, even in a supply chain environment to manufacture in-house,
everything that is required across the chain. Instead, outsourcing, lean
manufacturing, Just in time (JIT) etc need to be followed. All these
need proper linking with each other to produce the desired effect.
f. Strategic alliances and relationship management: Every chain partner

shall look from its own perspective in a supply chain leading to
strategic alliances across the chain. Once formed these partnerships
need to be developed through effective relationship management
g. Develop performance measures: Performance measures are basically

development of standards of performance and method for their
measurement across the chain so that suitable action can be initiated
to see that the performance of the entire chain remains optimum.
IMPORTANCE OF SUPPLY CHAIN MANAGEMENT
25
When we talk about the importance of Supply chain management we try to

bring into sharp focus the loss due to the absence of an effective supply
chain strategy and / or the benefit due to a well oiled supply chain for any
firm. Basically, it is a question of how good is the integration of supply
chain that matters for any firm.
Of critical importance in today's business scenario is managing competition

through partners.
An independent firm on its own may not have all the resources to match its
competitors. But by having an upstream and a downstream arrangement of
getting the input , processing it into output and then pushing it to the
downstream for distribution with effective chain partners it can face any
business challenges. Importance of having a strong Supply Chain
Management can be understood by an example:
ABC manufactures the cycle chains for a cycle manufacturing company

XYZ. Another company PQR manufactures bits used in the cycle chain
manufactured by ABC.
In coming days, as per the market forecast, XYZ shall need 50,000 units of
cycle chain, information that is not available with ABC. Accordingly, PQR
also does not know how many bits to produce in order to meet ABC's
requirement. The result would be either both ABC and PQR hold high safety
stock inventory or lose business respectively with XYZ and ABC.
Now, if in this example showing only three supply chain partners, absence
of a critical information among. The partners, that is of production forecast
at XYZ firm results into either a higher inventory level or loss of future
26
business what would happen if the supply chain consisted of a large number
of partners, a scenario normally existing for medium to large sized
companies, the world over ?
In an era of gaining competitive advantage through reduced inventories all

over, a company is going to have terrible disadvantage of having to carry
unnecessary inventory for the fear of losing future business.
The importance of Supply Chain Management thus is in:
 Reduced inventories along the chain

 Better information sharing among the partners
 Planning being done in consultation rather than in isolation
The benefits too would be reflected in terms of:
 Lower costs
 Better customer service
 Efficient manufacturing
 Better trust among the partners leading to win-win
Process integration and other efforts result in improved quality as higher

profit margins shall get reflected in creation of better facilities for
manufacturing, product design research, and enhanced customer service.
BENEFITS OF SUPPLY CHAIN
27
Supply chains, no doubt, are expensive and complicated at times. Yet

because they influence the overall efforts of reaching out to the ultimate
customers in a cost effective and smooth manner that they've real benefit to
have one or many.
There could be a situation where a supplier may satisfy the ultimate

customer directly, for example a vegetable vendor reaching out to his
customer by the road side.
This may not need any supply chain to work but suppose the same supplier
meeting the needs of many customers spread along the length and the width
of his city, needing vegetable around the same time. Obviously, they may
need one or many delivery outlets from the supplier, some stocking by the
supplier and thus a small but suitable warehouse by the supplier.
Supply chains exist to overcome the gaps created when suppliers are
distance away from the customers. They help in conducting operations that
can be done only at a distance from the customers.
Benefit of supply chain can be understood by a simple imagination of a

service that passes through various modes, covering various regions to
finally reach the ultimate customers needing that service in yet another and
various locations. It involves moving materials in geographically separate
locations and meeting usually a mismatched demand of that material.
For example, let us say that a firm operating from four factories has to
supply materials to eight customers. If all the factories supply to all the
customers directly then there would be in all 32 routes!!
28
However, if all the materials from the 4 factories are offloaded in a

warehouse that caters to the need of the 8 customers then only 4 inward and
8 outbound routes , that is 4+8 = 12 routes shall be required.
A well designed supply chain shall provide the following benefits:
a. Operations can be located in the best locations irrespective of
customers locations
b. Bigger facilities can be created and hence economies of scale can be
thought of.
c. Large stocks need not be kept at the producer's end as the same can be
kept with wholesalers near the customers.
d. Retailers carry less stocks as whole sellers provide them the materials
whenever needed
e. Lead times for retailers are short
f. Uninterrupted availability to customers
g. Transport is simpler and routine
SUPPLY CHAIN PROCESS
The concept of supply chain management encompasses four main

decision areas: location, production, inventory, and distribution. Within
these areas decisions fall into two main categories: Strategic decisions
29
deal with the long-term future; and operational decisions deal with the
short term running of the company.
I.
In order to create a supply chain you must first decide on the geographic
location of the facilities that the organization uses. These facilities include
production plants, warehouses and distribution points, suppliers, and buyers.
30
A supply chain is essentially the interaction between these facilities and the
processes by which products move between them.
Strategically the location of the above facilities must be determined by the

location of the target market for the organisation. It will have an effect on
running costs, taxes, local content, distribution costs, and service.
The decision to locate a facility commits the organisation to allocating

resources and, in some cases, very large amounts of capital. Therefore it is
imperative that the location is determined on a strategic level. Operationally
the location of facilities may affect the efficiency of the running of the
business.
II. Production
A supply chain is useless unless it has a product to pass through it. The
decision on which product to produce is directly affected by the
organizations target market and therefore is a strategic decision. Other
strategic issues include the allocation of resources to the production plants
(i.e. suppliers), and the capacity of the plants.
Operational issues include the day to day running of the plants. Examples of
these are production scheduling and quality control.
III. Inventory
Decisions in this area affect all stages of the supply chain. The inventories
throughout the chain will probably be at differing stages of development.
31
For instance the inventories at the beginning of the chain will be raw
materials, at the end they will be the finished products. These inventories, no
matter what stage they are at have a value that is not yet being realized. In
order to minimize the unrealized value of the goods efficient management of
the inventories must take place. Most of the issues involved with inventory
are operational, for instance the maintenance of stock levels within safety
boundaries. On a strategic level management set the goals that are to be
achieved in this area and determine the reorder strategies (i.e. JIT).
IV. Distribution
The key decisions in the distribution area involve the trading-off of
inventory levels of buyers with the costs of freight. Another matter to be
considered is the nature of the product. It is no good sending a shipment of
perishable goods via sea or rail to save money if the goods are not in a
suitable condition once they reach their destination. On the other hand
shipping by sea or rail is cheaper but necessitates higher inventory levels to
counter the uncertainty associated with these methods (i.e. bad weather
when shipping by sea).
Strategically, forecasts of the demand for the product allow for the co-
ordination between the distribution by various methods and the buyers
inventory levels.
PROCESS VIEW OF THE SUPPLY CHAIN
Cycle view
32
Sources Converters Retailers
Product and Service Flow
Information Flow
Funds Flow
Suppliers Distributors Consumers
1. Customer Order Cycle

Customer arrival
Customer order entry
Customer order fulfillment
Customer order receiving
2. Replenishment Cycle
Retail order trigger
Retail order entry
Retail order fulfillment
Retail order receiving
3. Manufacturing Cycle
Order arrival
Production scheduling
Manufacturing and Shipping
Receiving
33
4. Procurement Cycle
Supplier / Manufacturer interface
PUSH-PULL VIEW OF SUPPLY CHAIN
Execution is initiated in response to a

Pull Process:
customer order (increased responsiveness)
Push Process: Execution is initiated in anticipation to a

customer order (increased efficiency)
Push-Pull Boundary: Which processes are of each type
Push Systems: MRP supported
Pull Systems: Require fast information transmission and

sharing
34
Cycles
Customer
Order
Pull
Supplier / Manufacturer interface
Replenishment
Manufacturing
Push
Procurement
35
SUPPLY CHAIN MANAGEMENT PROBLEMS
36
Supply Chain management must tackle the following problems:
 Distribution Network Configuration: Number and location of

suppliers, production facilities, distribution centers ,
warehouses and customers
 Distribution strategy: Centralized Vs decentralized , cross
docking, direct shipment, 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 material, work-in-process and finished goods
service providers and customers.
Thus Supply chain management (SCM) can also be described as the
oversight of materials, information, and finances as they move in a process
from supplier to manufacturer to wholesaler to retailer to consumer. Supply
chain management involves coordinating and integrating these flows both
within and among companies. It is said that the ultimate goal of any
effective supply chain management system is to reduce inventory (with the
assumption that products are available when needed). As a solution for
successful supply chain management, sophisticated software systems with
Web interfaces are competing with Web-based application service providers
(ASP) who promise to provide part or all of the SCM service for companies
who rent their service.
37
SUPPLY CHAIN FLOWS
SUPPLY CHAIN FLOWS
VALUE
VALUE FLOW: - flow of goods and services from supplier to customer

(occasionally there could be a reverse flow of goods from customers to
suppliers i.e. reverse logistics)
Flow to supplier side is referred to as upstream and customer side as
downstream.
INFORMATION FLOW:- it flows both upstream and downstream –

upstream (against the direction of major value flow) – includes inputs for
38
forecasts, marketing plans, dispatch plans, production plans, procurement

quantities and timing, orders from customers/dealers, quality feedback,
warranties invoked etc. downstream refers to – stock available, dispatch
advices, stock transfer notes, quality assurance reports, warranties etc.
CASH FLOW:-cash flow determines how a given value flows is financed by

various players in the supply chain. The optimal cash flow structure will be
determined by the “power balances” between supplier, converter and
customer and the relative cost of finance and other fiscal benefits between
these players.
39
DECISION PHASES IN A SUPPLY CHAIN
SCM is an approach to manage the entire flow of information, materials and

services from raw material suppliers through factories and warehouses to the
end customer. SCM is a very complex problem in itself. It involves
complex decision-making at various modes and can be of different level.
Supply Chain Decisions can be classified in three categories:
40
Strategic activities:
 Strategic network optimization, including the number, location, and

size of warehouses, distribution centres and facilities.
 Strategic partnership with suppliers, distributors, and customers,

creating communication channels for critical information and
operational improvements such as cross docking, direct shipping, and
third-party logistics.
 Product design coordination, so that new and existing products can be

optimally integrated into the supply chain, load management
 Information Technology infrastructure, to support supply chain

operations.
 Where to make and what to make or buy decisions
 Align overall organizational strategy with supply strategy
Tactical activities
41
 Sourcing contracts and other purchasing decisions.
 Production decisions, including contracting, locations, scheduling, and

planning process definition.
 Inventory decisions, including quantity, location, and quality of

inventory.
 Transportation strategy, including frequency, routes, and contracting.
 Benchmarking of all operations against competitors and

implementation of best practices throughout the enterprise.
 Milestone payments
Operational activities:
 Daily production and distribution planning, including all nodes in the

supply chain.
42
 Production scheduling for each manufacturing facility in the supply

chain (minute by minute)
 Demand planning and forecasting, coordinating the demand forecast

of all customers and sharing the forecast with all suppliers.
 Sourcing planning, including current inventory and forecast demand,

in collaboration with all suppliers.
 Inbound operations, including transportation from suppliers and

receiving inventory.
 Production operations, including the consumption of materials and

flow of finished goods.
 Outbound operations, including all fulfilment activities and

transportation to customers.
43
 Order promising, accounting for all constraints in the supply chain,

including all suppliers, manufacturing facilities. distribution centers,
and other customers.
 Performance tracking of all activities
SUPPLY CHAIN STRATEGY OR DESIGN
The real-world experience provides the capability to plan solutions that are
practical, as well as aggressive and future-oriented. The flexibility to work
on any aspect of Supply Chain decision and operation, in addition to the
44
vision and integration of an end-to-end design including ‘suppliers and

customers’.
An effective Supply Chain development lies in recognizing that any

company should be operating a number of Supply Chains, for different
linkages of distinct sources, customer, products, channels; leveraging the
capabilities of all participants in the chain, upstream and downstream,
internal and third party; creating a demanding vision for the future, and
sequencing a series of interim, attainable, steps to reach it; knowing the
baseline starting point of Supply Chain performance, and measuring the
current state constantly. Understanding the human dimension of the
significant process, behavioral, and belief changes that are required for
breakthrough in Supply Chain performance; making operational
improvements early and often, while developing the Information Systems
foundation for better transaction processing, communications and decision
support; and keeping the long-term vision, the end-state objective, in view at
all times. The scope of collective experiences a real advantage in planning
and executing a Supply Chain implementation, for sourcing and
procurement, through manufacturing integration, into Transportation and
Network Design, and Warehousing and Distribution operations.
SUPPLY CHAIN PLANNING
From acquiring raw materials to delivering finished products to end

users, logistics operation include all activities along the supply chain
process, or as commonly referred to in logistics circles, from "the
suppliers' supplier to the customer's customer." this is the supply chain.
In well-functioning supply chain, at every link, each unit should treat the
45
next units a customer, always focusing on service to the ultimate

customer, the end user or client.
CUSTOMERS FOCUS
A well-functioning supply chain staff consciously strives to anticipate and

satisfy customers' need. Supply chain managers, in addition to their primary
customers, also have important intermediate customers, each with special
needs and expectations.
Service providers are the final link in the long supply chain that stretches
from manufacturers to customers. Because they directly link logistics
operations to the ultimate customer, service are the most important
"intermediate customer." service providers must be given the products they
need. Their fundamental concern is quality of care, and they understand the
supply chain system's contribution to their ability to provide quality care.
Service providers need the logistics system to deliver a dependable supply of
quality products and other supplies for their client, which means they need
convenient and regular re-supply with minimal additional work.
Warehouses and stores in the distribution chain are also intermediate

customers that demand logistics systems resources (staff, storage space, and
transport); regular and predicable re-supply of all products from the next
higher level, and technical support and problem-solving assistance, when
needed.
Policymakers and senior program managers, as representatives of the

program, also need to be treated as customers by the next highest level in the
46
system: donors, lenders, or other suppliers of products. They want the same
thing as every other customer along the supply chain: reliable availability of
the right products at the right time. They also need the supply chain system
to provide accurate data on stocks levels and strict accountability for
materials, and to provide cost effective logistics operations. Policymakers
are particularly important internal customers, because they control the
allocation of funds and other resources for the supply chain. International
donors are the customers of their own suppliers. But, they also have
expectations from the in-country logistics system: they want the system to
ensure accountability for donated products; and accurate and timely data on
products consumed, quantities needed. Above all, donors want the logistics
system to ensure the availability of products to all current and potential
customers.
When developing a customer culture within a supply chain, it is essential to

identify all the system's customers and their respective needs and
expectations. The primary customer, however, is always the client. While a
supply chain may be required to satisfy a variety of internal or intermediate
customers, the most successful supply chain unswervingly focus on
satisfying end users.
47
SUPPLY CHAIN DRIVERS
Inventory
This refers to means by which inventories are managed. Inventories exist at

every stage of the Supply Chain as raw materials, semi-finished goods or
finished goods. They can also be in process between locations. Their
primary purpose to buffer against any uncertainty that might exist in the
Supply Chain. Since, holding of inventories can cost anywhere between 20
to 40 per cent of their value, their efficient management is critical in Supply
Chain operations. It is strategic in the sense that top management sets goals.
However, most researchers have approached the management of inventory
form an operational perspective. These include deployment strategies (pull
verses push), control policies – the determination of the optimal levels of
order quantities and reorder points, and setting safety stock levels, at each
stocking location. These levels are critical, since they are primary
determinants of customer service levels.
The keys to effective Inventory Management lie in shortening the lead-time

throughout Supply Chain:
 Understanding how order frequencies and quantities drive inventory –

and its consequent effect on warehouse sizing and slotting,
48
 Analyzing the trade-off of centralized vs. distributed inventory, in

terms of inventory investment, transportation costs, and customers
service capabilities,
 Integrating and coordinating the silos in your organization, for

optimum inventory strategies across the entire Supply Chain,
 Being bold, and confident, enough to make inventory decisions for

operational improvements – in the face of negative accounting issues;
and building a Supply Chain and inventory strategy to evaluate your
customers’ expectations – and anticipate their genuine needs.
Includes:
1. Raw Materials
2. Component parts
3. Work in process (WIP)
4. Finished goods
Transportation
The mode choice aspects of these decisions are the more strategic ones.
These are closely linked to the inventory decisions, since the best choice
49
is often found by trading off the costs of using the particular mode with
the indirect cost of inventory associated with that mode. While air
shipments may be fast, reliable, and want lesser safety stock, but they
are expensive. Meanwhile shipping by sea or rail may be much cheaper,
but they necessitate holding relatively large volumes of inventories to
buffer against the inherent uncertainty associated with them. Therefore,
customer service levels, and geographic location play vital roles in such
decision. Since, transportation is more than 30% of the Logistics costs,
operating efficiency makes good economic sense. Shipment sizes
(consolidated bulk shipment versus lot-for-lot), routing and scheduling
of equipment are key in effective management of firm’s transport
strategy.
The estimated Rs 65,000crore Indian trucking industry has been in

existence before SCM as a concept came into vogue. Trucking plays a
vital role in SCM in the flow of material. The success of the entire
exercise of planning and investing in ERP and Supply Chain software
depends on whether goods reach on time. “Timely movement of goods
is primary concern of any Supply Chain. The traditional transport
companies are now transforming into a fleet manager offering value-
added services like track and trace, specialized trucks for certain goods,
warehousing and other facilities, and serving user specific industries.
The need to provide value-added services has also resulted in strategic
tie-ups by truckers, say with specialized operators to serve specific
industries.
50
Transportation includes the following:

i. Moving inventory from point-to-point
ii. Impact on
(1) Responsiveness
(2) Efficiency
The future of the Indian trucking industry depends on various factors

like economic growth and investments in infrastructure. At present a
number of organised transport operations are leveraging on their
strength in trucking by combining allied services like clearing and
freight forwarding, warehousing and customer relationship Management
to become complete Logistics players. This is taking the form of tie-ups,
acquisition. The future will see similar consolidation happening in this
arena, especially in the organised segment that makes about 15% of the
market.
51
Commercial Vehicles : The Movement Zones

Type of Movement Key Feature
Long distance, bulk
Raw material to factory
movement
Primary Finished goods to
Mechanical handling
warehouses
Operational economy
Convenient batches
Warehouse to Safe transportation
Secondary
wholesaler/retailer Timely distribution
Optimum turnaround
Door delivery
Timely delivery
Wholesaler / retailer to
Tertiary City Operations
consumer
Frequent start-stops
High maneuverability
The potential issues and opportunities in most transportation situations

are:
 Is the internal fleet cost-and-service effective?

 Are you getting the most of your money from common carriers?
 When 3PL solution is is the right way to go?
 Are you paying what you have agreed to?
 Is the mix of modes and services you are using right for your
changing business?
 How much should I be charging my customers for delivery?
 Why can’t my fleet make money?
52
 How can transportation enable an integrated Supply Chain,

instead of getting in the way?
Facilities
a) Warehousing/Storage
Warehouse is the quiet key to effective service. Review whether the
warehouses are in the right locations to effectively serves the customers.
With the speed that is required to manage orders and inventory,
companies must have timely, accurate information of inventory on-
hand. Warehouses must be located in the proper areas to effectively
meet customer’s delivery requirements.
i. Where inventory
(1) Stored
(2) Assembled
(3) Fabricated
ii. Types
(1) Storage
(2) Production
(3) Marketing
b) Material Handling
It is concerned with movement of product at the stocking point and it
involves decisions such as:
 Smoothening of raw material
 Selection of material handling equipment
 Maintenance of material handling equipment.
53
"The Mission of Materials Management Services

is the acquisition
of the RIGHT goods and services,
in the RIGHT quantity,
at the RIGHT time,
of the RIGHT quality,
at the RIGHT place,
from the RIGHT supplier
and at the RIGHT cost,
at a minimum inventory and operating investment."
c) Packaging
It is concerned with design of packaging of product that ensures damage free
movement of the product and is conductive to efficient handling and storage.
Information
A must for successful implementation of Logistics functions.

Developing proper Data Base, IT system, such as ERP and DI methods.
 Accurate forecasting
 Good order Management
 Just-in-time (JIT)
 Contingency Replenishment (CR)
 Quick Response (QR) to the customer
- are the bases for good information system to be developed.
54
ORDER PROCESSING
The order processing system undergoes various checks to determine if:
(1) the desired product is available in inventory in the quantities ordered,

(2) the customer’s credit is satisfactory to accept the order, and
(3) the product is scheduled for production if not currently in inventory.
Management can also use the information on daily sales as an input to its
sales forecasting package. Order processing next provides information to
accounting for invoicing, acknowledgement of the order to send to the
customer, picking and packing instructions to enable warehouse withdrawal
of product, and shipping documentation. The primary function of the order
processing system is to provide a communication network that links the
customer and the manufacturer.
55
THE BULL WHIP EFFECT
Bullwhip Effect - a lesson for scm partners to be fair
Process integration in a supply chain system plays extremely important role

for the Supply Chain to be effective and competitively viable. It implies that
the chain partners be fair in respect to information exchange.
For example, a firm XYZ produces cycle chains for the cycle manufacturing
firm ABC. Another company PQR produces chain bits for the company
XYZ.
Let us assume that the actual demand of ABC is not known to XYZ for a
month.
XYZ also produces the chain bits for other chain manufacturers. So, XYZ ,
in order to meet the unknown requirement of ABC would like to keep a
higher safety stock or the month. PQR also shall have to keep a higher level
of safety stock for meeting the unknown requirement of XYZ.
This is a cascading effect resulting into higher safety stocks at the end of
both the suppliers in the chain, XYZ and PQR.
In this small example, with only two suppliers being in chain, the inventory
levels have gone unnecessarily high because of the lack of information on
accurate demand of cycles at ABC's end.
56
Higher inventory is blocking of working capital for the firm that reduces the
operational efficiency.
Just imagine what would be happening under these circumstances if the

number of chain partners were to be large.
The aggregate inventory would have been much higher. This is called
Bullwhip effect.
That is the building up of inventory along the chain as a negative effect or

loss of opportunity cost resulting from the absence of a coordinated effort ,
suitable and timely flow of information among the supply chain partners.
Process integration therefore is the need of the hour for the Supply chain
partners for benefit sharing through:
 reduced costs in inventory holding
 utilizing opportunity cost in better product design and
 manufacturing and earning more profit
57
CAUSES OF THE BULLWHIP EFFECT
The following four have been identified as the major causes of Bullwhip
Effect:
1. Demand forecast updating.

2. Order batching.
3. Price fluctuation.
4. Rationing and shortage gaming.
58
Each of the four forces in concert with the chain’s infrastructure and the
order manager’s rationalize decision-making create the bullwhip effect.
Understanding the causes helps managers’ design and develops strategies to
counter it.
Demand Forecast Updating
Every company in a Supply Chain usually forecasting for its production

scheduling, capacity planning, inventory control, and material requirements
planning. Forecasting is often based on the history from the company’s
immediate customers. When a downstream operation places an order, the
upstream managers processes that the piece of information as a signal about
future product demand. Based on the signal, the upstream manager readjusts
his or her demand forecasts and, in turn, the orders placed with the suppliers
of upstream operation. We contend that demand signal processing is a major
contributor to the bullwhip effect.
Order Batching
In a Supply Chain, each company places orders with an upstream
organization using some inventory monitoring or control. Demands come in;
depleting inventory but the company may not immediately place an order
with its supplier. It often batches or accumulates demands before issuing an
order. There are two forms of order batching: periodic ordering and push
ordering. Instead of ordering frequently, companies may order weekly,
biweekly, or even monthly. There are many common reasons for an
inventory system based on order cycles. Often the supplier cannot handle
frequent order processing because the time and cost of processing an order
can be substantial. Many manufacturers place purchase orders with suppliers
59
when they run their material requirements planning (MRP) systems. One
common obstacle for a company that wants to order frequently is the
economies of transportation. There are substantial differences between full
truck-load (FTL) and less-than-truckload rates so companies have a strong
incentive to fill a truck-load when they order materials from a supplier.
In push ordering, a company experiences regular surges in demand. The

company has orders “pushed” in it from customers periodically because
salespeople are regularly measured, sometimes quarterly or annually,
which causes end-of-quarter or end-of-year order surges. Salespersons
who need to fill sales quota may borrow ahead and sign orders
prematurely. When a company faces such periodic ordering by its
customers, the bullwhip effect results. If all customers’ order cycles
were spread out evenly throughout the week the bullwhip effect would
be minimal. The periodic surges in demand by some customers would
be insignificant because not all would be ordering at the same time.
Unfortunately, such an ideal situation rarely exists. Orders are more
likely to be randomly spread out or, worse, to overlap. When order
cycles overlap, more customers that order periodically do so at the same
time. As a result, the surge in demand is even more pronounced, and the
variability from the bullwhip effect is at its highest.
If majority of companies that do MRP or Distribution Requirement

Planning (DRP) to generate purchase orders do so at the beginning of
the month (or end if the month), order cycles overlap. Periodic
execution of MRPs contributes to the Bullwhip Effect, or “MRP jitters”
or “DRP jitters.”
60
Price Fluctuation
Estimate indicate that 80 percent of transactions between manufacturers
and distributors in the grocery industry made in a “forward buy”
arrangement in which items were bought in advance of requirements,
usually because of a manufacturer’s attractive price offer. Forward
buying results from price fluctuations in the market place.
Manufacturers and distributors periodically have special promotions like
price discounts, coupons, rebates, and so on. All these promotions result
in price fluctuations. When high-low price occurs, forward buying may
well be a rational decision. If the cost of holding inventory is less than
the price differential, buying in advance makes sense. In fact, the high-
low pricing phenomenon has induced a stream of research on how
companies should order optimally to take advantage of low price
opportunities.
Rationing and Shortage Gaming

When product demand exceeds supply, a manufacturer often rations its
product to customers. In one scheme the manufacturer allocates the
amount in proportion to the amount ordered. For example, if the total
supply is only 50 percent of the total demand, all customers receive 50
percent of what they order. Knowing the manufacturer will ration when
the product is in short supply, customer exaggerate their real needs
when they order. Later, when demand cools, orders will suddenly
disappear and cancellations pour in. this seeming overreaction by
customer anticipating shortages results when organizations and
individual makes sound, rational economic decisions and “game” the
potential rationing. This effect of “gaming” is that customers’ orders
61
give the supplier little information on product’s real demand, a

particularly vexing problem for manufacturers in a product’s early
stages.
HOW TO COUNTERACT THE BULLWHIP EFFECT
Understanding the causes of bullwhip effect can help managers find to

migrate it. Indeed, many companies have begun to implement
innovative programs that partially address the effect. Next, examine
how companies tackle each of the four causes. Categorize the various
initiatives coordination mechanism, namely information sharing,
demand information at a downstream site is transmitted upstream in a
timely fashion. Channel alignment is the coordination of pricing,
transportation, inventory planning, and ownership between the upstream
and downstream sites in a Supply Chain. Operational efficiency refers to
activities that improve performance, such as reduced costs and lead-
time. We use this topology to discuss ways to control the bullwhip
effect.
 Avoid Multiple Demand Forecast Updates

 Break Order Batches
 Stabilize Prices
 Eliminate Gaming in Shortage Situations
62
Causes of Channel Operational

Information Sharing
Bullwhip Alignment Efficiency
 Understanding  Vendor  Lead-time

system dynamics managed inventory reduction
 Use point-of-scale  Discount for  Echelon-
Demand
(POSI data) information sharing based inventory
Forecast  Electronic data  Customer control
Update Interchange (EDI) direct
 Internet
 Computer-assisted
ordering (CAO)
 EDI  Discount for  Reduction in

 Internet ordering truck-load fixed costs of
assortment ordering by EDI
Order  Delivery or E-commerce.
Batching appointments.  CAO
 Consolidation
 Logistics
outsourcing.
 Continuous  Everyday
replenishment low price (EDLP)
Price
program (CRP)  Activity-
fluctuation
 Everyday low based costing
cost (EDLC) (ABC)
 Sharing sales,  Allocation

Shortage
capacity, and inventory based on past
Gaming
data sales.
63
Table 1: A Framework for Supply Chain Coordination Initiatives

We contend that the bullwhip effect results from rational decision
making in the Supply Chain. Companies can effectively counteract the
effect by thoroughly understanding its underlying causes. Industry
leaders like Proctor & Gamble are implementing innovative strategies
that pose new challenges organizational relationships, and implementing
new incentive and measurement systems. The choice of companies is
clear: either let the bullwhip effect paralyse you or find a way to
conquer it.
HOW TO REDUCE THE BULLWHIP EFFECT
One way to reduce the bullwhip effect is through better information, either
in the form of improved communication along the supply chain or better
forecasts. Because managers realize that end-user demand is more
predictable than the demand experienced by factories, they attempt to ignore
signals being sent through the supply chain and instead focus on the end-
user demand. This approach ignores day-to-day fluctuations in favour of
running level. Another solution is to reduce or eliminate the delays along
the supply chain. In both real supply chains and simulations of supply
chains, cutting order-to-delivery time by half can cut supply chain
fluctuations by 80%. In addition to savings from reduced inventory
carry costs, operating costs also decline because less capacity is needed
to handle extreme demand fluctuations.
“The simplest way to control the bullwhip effect caused by forward buying
and diversions is to reduce both the frequency and the level of wholesale
price discounting.”
64
In addition to cycle time reductions throughout the supply chain the

following are the actions to reduce the supply chain management bullwhip
effect:
1. Focus on end-user demand through point-of-sale (POS) data

collection, electronic data interchange (EDI), and vendor-managed
inventories (VMI) to reduce distortions in downstream
communication.
2. Work with vendors to create smaller order increments and reduce

order batching. Order batching exacerbates demand fluctuations.
3. Maintain stable prices for products. Price fluctuations encourage

customers to over-purchase when prices are low and cut back on
orders when prices are high, leading to large demand fluctuations.
4. Allocate demand among customers based on past orders, not present

orders to reduce hoarding behavior when shortages occur.
CREATING AND MANAGING A LEAN SUPPLY CHAIN?
Lean is how a properly designed and operated supply chain should function.
A lean supply chain process is one that has been streamlined to reduce and
eliminate waste or non-value added activities along the supply chain flow
associated with the movement of products. Waste can be measured in time,
inventory and unnecessary costs. Value-added activities are those that
contribute to efficiently placing the final product at the customer’s door. The
supply chain and inventory contained in the chain should flow. Any activity
that stops the flow or that touches inventory should create value.
65
Lean supply chain management is not just for manufacturers who practice
lean manufacturing. Nor is it just for large retailers. It is a practice that can
benefit small and mid-size home furnishings retailers, wholesalers,
distributors and others.
WHAT IS LEAN SUPPLY CHAIN MANAGEMENT?
Supply chains tend to accrue waste and non-value added activities for many
reasons, both internal to the company and external. Regaining lean supply
chain efficiencies may mean addressing many of the same issues that created
the problems of extra and unneeded time, inventory and costs.
66
The ideal approach is to design the perfect supply chain and fit your
company’s operation onto it. Supply chain management is meant to reduce
excess inventory in the supply chain. It should be demand driven, built on
the “pull” approach of customers pulling inventory in a flow as required, not
by suppliers pushing inventory. Excess inventory reflects the additional time
spent within the supply chain operation. So the perfect supply chain is lean,
having removed wasteful time and inventory.
A lean supply chain, with the pull, flows back from the store floor through to
purchase orders placed on suppliers. Anything that delays or impedes this
flow must be analyzed as a potential non-value added activity.
WHAT MUST BE DONE TO BE LEAN?
 Understand that this is an ongoing, continuous improvement approach

as compared to business process reengineering which can be viewed
as a one-time change.
 Gain top management’s commitment. Continuous improvement

requires ongoing support.
 Build a multi-discipline team for the project—one that understands

lean supply chain management.
 Analyze the total supply chain process, not just the outbound or just
the inbound part.
 Map the process

67
 Assess for gaps or redundancies in the process that create time, the
key waste.
 Avoid cannibalizing the process by just focusing on warehousing or

transportation or other activities instead of studying the entire supply
chain process.
 Realize cause-effect impacts. High freight cost, for example, can be a

problem or a symptom.
 Excess inventory can be a problem or, more often, a symptom of a

problem.
 Drive for root causes, not symptoms.
 Comprehend the complexity of supply chains with multiple suppliers,

distribution centers and stores.
 Appreciate the fundamental impact of international sourcing and

shipping on time and inventory.
 Grasp the impact of the organization and culture on supply chain

process design and operation.
 This can be overlooked as a factor in achieving or not achieving lean.
68
 Analyze the effect of continuing external events, such as Homeland

Security activities or imports, on lead times and on lean dynamics.
 Calculate the risks of the lean supply chain. Reducing inventory frees
up capital; reducing time improves the cash-to-cash cycle. However
reducing inventory, without a properly designed process, removes the
comfortable feeling that accompanies excess inventory and can
expose you to the risk of lost sales.
 Observe the effect that time has on inventory and on an effective

process.
 Assess where standardization is feasible and where customizing to

specific customer requirements is needed.
 Collaborate with suppliers. It is a requirement, not an option; and it is

a two-way exchange.
 Demand supplier performance. It is vital to a lean supply chain

operation.
 Measure the present process as total cycle time, costs and inventory
(both in dollars and units) and inventory turns.
69
 Integrate the supply chain. Breaks in the flow, both internal and
external, can be pockets of waste.
 Identify non-value added activities, their effect and their cause.
 Rationalize the process.
 Improve the process to drive change.
 Streamline the process for unnecessary complexity as well as

unnecessary suppliers and service providers.
 Incorporate technology, such as supply chain execution technology, as

part of the process improvement.
 It is an enabler. Understand where standard ERP and other software

may, or may not, enable a lean supply chain.
 Use technology that includes event management and exception

management to enhance management and control.
 Supply chain complexity increases the need for event and exception
management technology and capability.
70
 Event management focuses on a key event(s) that must happen for

process or transaction success. Exception management focuses on
exceptions to what is expected instead of having to look at everything.
 Know that technology cannot overcome process flaws.
 Involve your people—employees, suppliers, service providers—to

provide input on present supply chain effectiveness and
improvements.
 Make the supply chain visible; recognize that blind spots can be areas
of waste.
 Recognize the viability of outsourcing as a driver of needed changes.

Proper outsourcing can provide people, process and technology that
may otherwise not be readily available.
 Probe for uncertainties that create inventory and other waste.

Forecasting accuracy is one area of opportunity.
 Investigate reasons why product does not flow in a more consistent

and predictable manner. Order and shipment releases from suppliers,
for example, can create inbound flows that mitigate time and
inventory buffers.
71
 Position inventories at the proper stores and distribution centers. The

right inventory at the wrong facility can result in inter-facility
transfers that add time and extra transport costs and can delay
customer order deliveries.
 This is a non-value added action that generates waste.
 Be open to the changes necessary for the creation of a lean supply

chain. From technology, such as WMS, to a completely redesigned
process, significant change can be expected.
 Include change management in your lean program requirements.
72
WAYS TO GET A LEAN SUPPLY CHAIN
Moving toward a lean supply chain means eliminating waste in three

ways: reducing working capital; enhancing operational productivity;
and improving "build-in" quality and reliability (implementing quality
controls on the front end of any process or procedure).
10 ways to get lean,
1. Make your supply chain more compact. Optimize the flow of goods
and information through the supply chain. Implement plant and
warehouse layouts and designs that streamline inbound and outbound
flows.
2. Reduce stock at point-of-use. To support a flexible production

schedule, keep a variety of part numbers on hand in the warehouse.
By executing lean logistics techniques such as sequencing and sub-
assembly you can avoid large inventory stocks and their associated
costs.
3. Balance the receipt and delivery of goods.

Matching the incoming and outgoing flow of material to customer
demands minimizes the amount of material stored in the supply chain,
resulting in lower costs.
73
4. Reduce capital expenditures by closely managing your empty

container flow. The reverse logistics process of handling empty
containers can be complex, so it needs to be well-managed to
guarantee reliable supply and the lowest level of damage. At the same
time, a well-managed empty container flow can significantly reduce
maintenance and container replacement costs.
5. Balance the work so your cycle time hits close to Takt Time. Every
task performed by an operator needs to fall close to Takt Time -- the
pace of production in each process that is necessary to satisfy
customer demand. This scheduling will help ensure minimal waiting
time and maximum productivity.
6. Optimize transportation routes. Employ recognized transportation

best practices to improve the efficiency of moving goods off the
production line and into delivery. By applying concepts such as
segregating flows into small and large lots, direct dock-to-line
feeding, and combining cycles (one full against one empty), you can
avoid wasteful internal transportation processes and optimize
available resources.
74
7. Optimize delivery. Avoid unnecessary replenishment through the

use of Kanban and other pull systems. These systems result in
replenishment based on consumption, keeping inventory lean.
8. Standardize warehouse processes. Implement stable and repeatable

processes, and standardize the time it takes to perform tasks such as
picking, packing, and put away. Standardization helps the warehouse
interface more accurately and efficiently with operations outside the
four walls, such as transportation.
9. Use visual management aids for information flow. Visual aids are
an important part of tracking the physical flow of materials in a plant
or warehouse. If everyone on the shop floor can "see" the current
production status, they can more easily react to peaks and valleys.
10. End and correct line stoppages. Stopping the production line is
costly and often unnecessary. When a problem arises, don't let it go
and plan to fix it later. Stop and correct the problem now. You might
temporarily slow productivity, but in the long run recurring problems
should end.
75
SCOPE OF A SUPPLY CHAIN MANAGER TODAY
The Buyer/Planner is responsible for all aspects of procurement

functions including source selection, material planning and logistics,
supplier relationship management administration, and purchase order
processing/tracking for production materials and indirect supplies,
services and equipment purchasing. All materials, supplies, services
and equipment purchases are to be executed efficiently for the best
total cost management, which includes supplier delivery performance,
quality, cost, and service. The position is further responsible for the
development of continually improving procurement strategies in
cooperation with the management team and peers of the successful
candidate.
The Scope of a Supply Chain Manager can be gauged from the hiring
and salary trends, across the world, that is witnessing a healthy rise
for a Supply Chain Manager compared to an MBA from any other
discipline. Courses in SCM are more searched on the net than many
traditional discipline searches.
** POSITION REQUIREMENTS FOR A SUPPLY CHAIN

MANAGER **
76
A. Essential Job Functions :

Secures and analyzes competitive quotations, negotiates prices and
terms, and recommends suppliers with respect to cost, quality, and
delivery performance competitiveness. All sourcing decisions will
consider suppliers' service and abilities to further the companies'
strategic objectives.
 Coordinates and analyzes material forecasts for efficient and
timely replenishment while managing :
i. A consistent flow of material receipts
ii. Increasing inventory turns
iii. Reducing inventory total value
 Initiates and administers purchase orders, blanket purchase

orders and amendments for products, materials, supplies,
equipment and services.
 Coordinate acquisition of samples to support source selection
activities and /or provide for first article inspections. Provide
close coordination with production, fulfillment, and other
requesting peers/departments to assure timely execution and
delivery of required purchases.
77
 Works closely with peers and management to implement and

continually improve procurement strategies and processes.
 Studies market prices and trends, engineering developments,

and manufacturing /fulfillment method improvements and
advises company activities with the concurrence of Director,
Procurement and Contracts. Performs competitive analysis to
determine best industry practices for competitive advantage.
 Interviews and communicates with current and prospective

suppliers to determine the following capabilities :
i. Supply and Replenishment
ii. Transportation logistics
iii. Inventory control and management
iv. Systems and EDI
v. Service Provisioning
78
 Tracks and reports suppliers' and the department's performance

against established metrics. Performs root cause analysis in
cooperation with peer departments and management to correct
problems and/or improve performance against all
measurements.
 Performs other related duties as required/assigned.
B. Required Skills / Experience :
 Personal computer skills are required. Experience in MS Word,

Excel, PowerPoint and Outlook is strongly preferred.
 In depth knowledge and purchasing and accounting processes
and practices is required.
 Must have excellent verbal and written communication skills.
 Leadership: a demonstrated ability to lead people and get
results through others.
C. Educational Requirements:
Bachelors degree in business administration with two (2) years of

progressively responsible purchasing and materials control experience
or an equivalent combination of education and experience
79
SUPPLY CHAIN AND IT
Information Technology is a prerequisite for successful Supply Chain

Management (SCM) today and will become even more so in the near
future. The e-Logistics field is developing very dynamically. Business-
to business transactions are made via the Internet and Enterprise
resource planning (ERP) systems manage the transactional information
within the enterprise. While IT systems are vital components in supply
chains, their successful management relies on intelligent and
coordinated decision making throughout the logistics network.
Intelligent Decision Support using advanced decision technologies is
becoming increasingly important in e-Logistics and SCM as well. Data
Warehouses and Data Mining can be used to store and analyze product,
inventory, and sales information. Simulation and optimization, which
can be found in advanced planning and scheduling systems, can be
employed for, e.g., inventory, production, procurement and distribution
planning. Intelligent agents can, e.g., communicate with different
partners in a supply chain, assist in collecting information, share
product information, negotiate prices, and distribute alerts throughout
the logistics networks and SCM as well is a very active field in
research, consulting, and software development. Many such
technologies or systems have been implemented recently or are
currently in the stage of implementation.
“IT is an inseparable part of SCM.”
80
Information technology (IT) is an essential element of the Supply Chain

strategy of an organization. SCM is, to a large extent, about managing
information flows. Unfortunately, lack of sophistication in the
information system is still one of the biggest roadblocks to Supply
Chain integration today. IT investments are still guided by technology,
functional and internal considerations and not by business strategy and
needs. There is a lack of extended enterprise functionality, lack of
flexibility, lack of more advance functionality beyond transaction
management, and lack of open, modular, internet-like system
architectures. The human error element too is painful.
In the absence of trust and partnership, organizations are not able to

share information. It sometimes doesn’t happen even within Supply
Chain activities. This leads to amplification of demand of the Supply
Chain, leading to the bullwhip effect. Firms are caught in a tricky
situation: even when the total demand variability is low, the variability
in orders is very high. This increases the Supply Chain cost, rendering
these firms uncompetitive. The solution of this problem is a centralised
information system. A few organisations have taken the initiative to
integrate their distribution network by implementing enterprise resource
planning and electronic data interchange across branches networks.
However, their work is incomplete without their suppliers and channel

partners. These organisations do not have centralised information,
which could lead to large variability in orders due to smoothening at
various levels of the Supply Chain.
81
THE INTEGRATED SUPPLY CHAIN STRATEGY
In order to optimize performance, supply chain functions must operate in an

integrated manner. But the dynamics of the enterprise and the market make
this difficult; materials do not arrive on time, production facilities fail,
workers are ill, customers change or cancel orders, etc. causing deviations
from plan. The Integrated Supply Chain Management (ISCM) addresses
coordination problems at the tactical and operational levels. It is composed
of a set of cooperating, intelligent agents; each performing one or more
supply chain functions, and coordinating their decisions with other agents
-this is called a Logistical Execution System (LES). Our approach views
problem-solving as a constraint satisfaction/optimization process where
agents influence each other's problem solving behavior through the
communication of constraints. Coordination occurs when agents develop
plans that satisfy their own internal constraints but also the constraints of
82
other agents. Negotiation occurs when constraints, that cannot be satisfied,

are modified by the subset of agents directly concerned. The recent advent of
the Internet and WWW as infrastructures for global connectivity has
confirmed the distributed multi-agent orientation of the project and has
allowed us to develop new Internet agent technologies that can aptly support
the global integration and management of the supply chain.
INTEGRATED SUPPLY CHAIN
INBOUND OUTBOUND
SUPPLY SUPPLY
CHAIN STORAGE
CHAIN
Outsourcing
Inbound Transportation Order Processing /
Warehousing
Production Planning Inventory
Inventory Control
(For Outsourcing & Outbound
in-house) Transportation
83
Achieving an Integration Supply Chain
84
Supply Chain Performance Metrics:
Why we are doing simulation? Because, we want to analyze our supply

chain. We need a set of performance metrics, which can be used to
determine comparative efficiencies of different configuration of supply
chain. These metrics can be either qualitative or quantitative. Qualitative
factors include Customer satisfaction, flexibility of supply chain,
information and material flow integration etc. But since these can't be
measured as numerical quantity, so it is very difficult to do comparison
based on it. Quantitative factors are as follows:
Cycle Time - can be supply chain process lead time or order-to-delivery of

lead-time.
Customer service level - measured by computing order fill rate, stock out
rate, back order rate and delivery probability of each individual element.
Inventory Levels and holding cost, Resource Utilization, Transportation

cost
Beside this we can also include cost of raw materials, penalties for
incorrectly order filled etc to our performance metrices.
85
CRITICAL STRATEGY AREAS FOR PURCHASING AND SUPPLY

MANAGEMENT
This reports on research that led to the development of five year purchasing
and supply based on the close examination of key change drivers. The
research include trends of importance for organization of all sizes in all
major industries- profit or non profit, privet and public. It was designed to
identify the most pressing issues faced by CEO’s and solicited the viewpoint
of purchasing professionals. The research consisted of three components:
1. an environmental scan of future trends;
2. chief purchasing officers interview; and
3. purchasing/supply executive focus group and a Delphi survey.
The study team conducted 8 regional focus groups with over 250
purchasing/supply executives. Prior to each focus groups, the executives
completed a survey containing 37 forecasts. The survey measured the
executives agreement and disagreement with each statement.
Critical strategy areas.
86
Purchasing supply executives raised 8 critical strategy areas for the next five
years. These issues are examined in descending order of consensus and
include a description of each area and summary statement.
SUPPLIERS COLLABORATION
An increasing focus will exist on relationship management with suppliers

and customers because of increasing global competitiveness, limited
resource and the need for a global reach whilst maintaining flexibility. In
certain industries there will be companies that are customer, supplier and
competitors to each other. The focus on the relationship management
including trust building, communications, joint effort and planning and
forecasting interdependency will increasingly be studied and managed to
achieve completive advantage.
Transaction processing will be minimized with considerable tactical/non

core competency purchasing-related activities outsourced to full-service
third parties. These relationship will also be managed as a key, but not
necessarily strategic relationship. A highly competent purchasing
professional group will continue to drive performance with external
suppliers to achieve competitive goals. Analysis of supply base and
coordination highly skilled, crossfunctional team will be critical activities.
87
 suppliers/customers relationship management could be combined in

one office or aligned to leverage relationship management
knowledge. However, concern exist about demand/supply priorities
and which will dominate.
 Cross-enterprise relationship management will increasingly have a

senior executive focus at the highest organizational levels, with a
slow migration. However, reporting dose not have to be directly to
the CEO.
 Non-strategic supplier will continue to manage closely. However,

the management will likely to focus on transaction elimination,
outsourcing to full service suppliers and automation of the buy.
INTEGRATED INFORMATION SYSTEM
Most firms were doubtful that demand-pull systems would ever be fully
implemented. The difference is that where suppliers are becoming more
integrated and involves throughout the chain, the internet is going to
provide more information. System is going to be pull-based in the
future.
Some forward thinking firms actually predicted that this would occur on
a limited basis within a limited numbers of firms. Some said that they
were investing enormous sum of money right now, applying demand
pull purchasing philosophies to provide a seamless link between
88
suppliers and buyers. The main challenge will be getting systems across
key supply chain members to work together.
 Demand-pull systems will use internet/world wide web

technology.
 The internet/world wide web will be the front end for

proprietary information systems.
EARLY INTEGRATION OF SUPPLIERS
Determination of first, second and possibly third-tier suppliers will become

more critical to supply chain dominant companies in future. Lean supply
chains will be a competitive strategy. Resource will increasingly be shared
between highly interdependent firm that rely on each other as
customer/supplier in supply chain to maximize value added contribution and
reduce duplication of recourses. Strategic purchasing competency centers
will be establish at dominant companies with highly trained personnel who
study their supply chain and search for opportunities to achieve competitive
advantage through their choice of supply chain partners.
 Dominant supply chain players will increase sourcing influence at

design and development stage.
 Buyers and suppliers will increasingly participate in joining planning

and development activities.
89
PERFORMANCE MEASURES
Supply chain will have common set of core performance measures tied
directly to individual companies strategic and business unit performance.
Benchmark are going to change. As supply chains are developed, new

supply chain benchmark will need to be developed and tied to particular
corporate goals.
The core measures will be augmented by measures specific to buyer-supplier

situations. Market price changes at final customer level will be transmitted
quickly up the supply chain and will be a key driver of performance.
Performance metrics other than cost will continue to be difficult to define.
 Common performance metrics will be established in some supply

chain industries.
 Price paid will continue to be an important measure of

performance.
Delivery Service
On time
Order fill rate
Lost Sales
Cost Time
Inventory Order cycle time
Freight Replenishment lead
Overheads Integrated Supply Chain
90
-time
PERFORMANCE MEASUREMENT
CROSS-FUNCTIONAL STRATEGIC TEAM
The future will hold tremendous changes in tactical procurement in

purchasing activities and how they are accomplished. Focused strategic
purchasing organizations will be a major contributor to their businesses.
Key activities will continue to included suppliers evaluation, selection and

development, including cross-functional and cross-enterprise teams.
However, tactical purchasing activities such as ordering, quoting and
expediting, etc…, will be automated and/or outsourced and head counts will
be reduced.
 Suppliers evaluation and development will remain in house.
 Tactical purchasing will become increasingly automated and selected

purchase commodities will be out sourced.
 Purchasing head counts will diminish somewhat, reflecting changes in

the work towards more strategic activities, with a reduction in tactical
personnel.
91
BUYER-SUPPLIER JOINT STRATEGIC PLANNING
Increasing linkages between supply chain and business unit/company wide

strategy is likely as supply chain strategies become more formalized and
firms looked for innovative sources of competitive advantage. To facilitate
the integration of cross-enterprise supply chains, strategic purchasing
personnel will be required further developed strategic alliance with key
supplier partners and key customers.
Insourcing /outsourcing decisions will be made regularly as a part of

strategic sourcing process. Supply chain strategy will increasingly influence
but not drive corporate strategy.
 Purchasing personnel will spend considerable time on supplier

alliance development.
 It is unlikely that CEOs will need purchasing managerial experience

so there will be new office of strategic relationship that reports
directly to CEO, or supplier payments will be tied to the flow of
finished products and services.
92
POSTPONEMENT / RISK POOLING IN SUPPLY CHAIN
Product design often plays an important role in supply chain management.

Many products come in different varieties – meeting global demand for
variety by holding multiple Stock Keeping Units (SKUs) of similar products
can require vast inventories. By redesigning the product so that more
inventory can be held in a customizable, "lowest common denominator"
form, inventory can be reduced.
This powerful supply chain management strategy is known as

"postponement", or "risk pooling"; postponement of the point of product
differentiation, or pooling of the risk of specific SKU forecast error. On the
left side of the figure below, the product is built for a specific country
market before it is even shipped out of the factory (a costly decision if the
unit does not sell, and particularly so if there are shortages of a similar
product in other countries). On the right, the product has been redesigned so
that localization can occur as close as possible to the local market.
A thorough study concluded that companies using postponement strategies

in their supply chains typically showed significant improvements in the
following performance measures:
 More accurate demand forecasting
 Reduced inventory costs
93
 Higher customer satisfaction
 Increased revenue
The reason sales (demand) forecasts become more accurate is that

postponement changes the entity to be forecasted, typically from item-level
(SKU-level) sales to aggregated quantities such as sales by product family or
group. Thus, while forecast error at the SKU level may actually be
unchanged, there is a distinct benefit to postponement, since it is virtually
always true that forecasting aggregated quantities (e.g., sales of a product
family) is easier than forecasting detailed quantities (e.g. SKU-level sales).
With postponement, the new product design allows managers to make
decisions based on the more-accurate aggregate forecast rather than less-
accurate SKU-level forecasts.
Inventory costs are lower because there are fewer overstocked products,
customer satisfaction is higher because there are fewer stock-outs, and
revenues are higher because there are fewer lost sales.
However, the survey also showed that many firms have not yet implemented
postponement along with their supply chain management initiatives. The
major stumbling blocks are:
 Lack of knowledge about benefits of postponement and costs
 Belief that their product or technology limits postponement
 Organizational misalignment (silo thinking)
The first two stumbling blocks can be solved through a greater

understanding of postponement at all relevant levels of the company,
94
including finance, manufacturing, sales/marketing, and engineering/design.

Regarding organizational misalignment, we have noted elsewhere in our
modules that as management discovers the real benefits to postponement,
the organizational structure often becomes more accommodating to ensure
success (this is true for many cross-functional supply chain initiatives). In
the best cases, metrics, or performance measures, on which various
departments are evaluated would shift to reflect a more cooperative
environment; one in which corporate (and entire supply chain) performance
is paramount.
SUPPLY CHAIN COST MANAGEMENT
Cost competition will increase due to world wide competitive pressures.

Firms within competing supply chains will increasingly be forced to
examine cost-improvement opportunities that are possible through co-
operation and by process improvements. This will require increasing co-
operation between firms to establish individual/joint cost-reduction
strategies. Formulaic pricing approaches will have to be developed for
engineered and specific products and services to ensure equitable profits and
returns on investment, while reducing costs. Costs models and cost saving
sharing will become increasingly in non commodity markets.
 Dominant supply chain companies will increasingly influence supply chain

member costs through target setting and communication.
 Decision-making cost results will be measured across the supply chain.
95
GLOBALIZE SUPPLY CHAIN
Supply chain will form upstream and downstream form dominant

companies. These companies will dominate because of their size,
technology, leadership or distribution system, among other reasons. They
will as a result influence sourcing decision and resource-sharing through
the supply chain.
Management of supply chain will be complex and will require much

relationship management. Complexity management will intensify,
creating new challenges for procurement professionals.
 Dominant companies in a supply chain will influence sourcing

decision of first, second and third tire suppliers. The dominant
company may be largest or the technology leader.
 As in a company’s supply chain share resources to their mutual

benefit, the complexity of the relationship will increase.
96
CONCLUSION
Appropriate responses to the 14 critical strategy areas will depend, to

a great extent, on organizational and contextual considerations. In
other words, large firms may react differently from small firms, and
manufacturing firms differently from non-manufacturing industries.
However, regardless of the context the perspective is emerging that
purchasing and supply management affects not just the material flow
of goods, but also information and cost along the value chain.
Purchasing and supply management executives will have a key role to
play in educating other functions in the organization as to the strategic
importance of purchasing and supply chain management.
In addition to the traditional cost focus, purchasing and supply

management will increasingly stress:
 Product focus through such initiative as strategic cost

management and strategic sourcing.
 Process focus through inter-organizational integration

necessitated by electronic interchange of product and
manufacturing process data;
 Customer focus through purchasing strategy development and

the virtual supply chain.
97
Management of extended supply chain will imply greater reliance on

information technology, compatibility of planning and information systems,
and greater need for strategic sourcing and supply management professional
will require greater ‘general management’ (i.e. interdisciplinary) training
than they have had in the past.
Purchasing and supplies management staff will be more business strategy –

oriented and will be expected to respond more quickly to demands of the
market and customer than under the traditional functional structure.
Supply chain performance evaluation will be linked more closely to business

objectives-business growth, profitability and market share and customer
satisfaction- for the entire chain. These changes will create a dynamic and
vital supply management environment.
98

Supply Chain Management: A Project ON

Încărcat de

Informații document

Descriere originală:

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Supply Chain Management: A Project ON

Încărcat de

Drepturi de autor:

Formate disponibile

SUPPLY CHAIN MANAGEMENT

SUPPLY CHAIN MANAGEMENT

K. J SOMAIYA COLLEGE OF ARTS & COMMERCE

MR. ANAND DESHPANDE

8TH OCTOBER, 2009’

I, Mr. Vikas D. Tater , of K.J Somaiya College Of Arts & Commerce of

I, MR. ANAND DESHPANDE, hereby certify that Mr. Vikas D. Tater of

_________________ ______________________ __________________

My grateful thanks to my project guide Mr. ANAND DESHPANDE

I would like to take the opportunity to thank my classmates for their

I would also like to offer my gratitude to our coordinator

I would also like to acknowledge the different websites, which helped

For this project I have referred a number of books of this subject. I

SECTIO TOPICS PAGE

3 WHAT IS SUPPLY CHAIN?

14 SUPPLY CHAIN FLOWS

16 SUPPLY CHAIN STRATEGY OR DESIGN

17 SUPPLY CHAIN PLANNING

18 SUPPLY CHAIN OBSTACLES/CHALLENGES

19 SUPPLY CHAIN DRIVERS

20 THE BULL WHIP EFFECT

21 CAUSES OF THE BULLWHIP EFFECT

22 HOW TO COUNTERACT THE BULLWHIP EFFECT

2 HOW TO REDUCE THE BULLWHIP EFFECT

24 CREATING AND MANAGING A LEAN SUPPLY CHAIN?

25 WAYS TO GET A LEAN SUPPLY CHAIN

26 SCOPE OF A SUPPLY CHAIN MANAGER TODAY!

27 SUPPLY CHAIN AND IT

28 THE INTEGRATED SUPPLY CHAIN STRATEGY

29 SUPPLY CHAIN PERFORMANCE METRICS

30 CRITICAL STRATEGY AREAS FOR PURCHASING AND

31 INTEGRATED INFORMATION SYSTEM

32 EARLY INTEGRATION OF SUPPLIERS

34 CROSS-FUNCTIONAL STRATEGIC TEAM

35 BUYER-SUPPLIER JOINT STRATEGIC PLANNING

36 SUPPLY CHAIN COST MANAGEMENT

37 GLOBALIZE SUPPLY CHAIN

Supply chain management has gained increasing recognition in

We can characterize the significant events that reflect the evolution of

Supply Chain Management offers, at the least, reduction in costs across

The activities of logistics are centuries old as discussed earlier. During

SCM is one of the most powerful engines of business transformation

started giving greater emphasis to distribution, giving rise to physical

Some of the terms like logistics, inbound logistics, materials management,

Supply Chain Management is a set of approaches utilized to efficiently

Table 1 - Chronological Dates

Duration Events in SCM Evolution

The Barter System evolved as an answer to the trading

House of Taxis operated courier messenger service for the rich

In the last phase, companies realized that the productivity

IBM outsourced almost all of its activities and built a full

As Ratan Tata unveiled the Rs 1 lakh[US$ 2500] car. It was

GREEN supply chains with minimal or ZERO waste.

Adani and Reliance – Ant and the Grasshopper story!

Reasons for the Big Breakthrough in the Past 20 years

The breakthrough revolution in the past 20 years is due to the following

Companies No two companies at the same Competition at all levels.

The main motive was to Main motive is customer service.

Production differentiation very Product differentiated nearer the

Reaction approach of Action approach of industries.

Customer Customer did not care about Customers demand exact

Less market moving powers More power devolved to the

_ ____