Presentation by

Group-1

Introduction Evolution Decisions Importance

Customer service & cost trade off

Scs Responsiveness Delivery reliability SC performance measures Drivers of SC performance

SCM is also called the art of management of providing the

Right Product, At the Right Time, Right Place and at the Right Cost to the Customer.

All activities involved in the transformation of goods from

the raw material stage to the nal stage, when the goods and services reach the end customer. Supply chain management involves planning, design and control of
Flow of material, Flow of information Flow of nance along the supply chain to deliver superior value to the end customer in an effective and efcient manner.

There have been three major revolutions in the field of supply chain
management.

The First Revolution(1910-1920): The Ford Supply Chain

The Second Revolution(1960-1970): The Toyota Supply Chain

The Third Revolution(1995-2000): The Dell Supply Chain

Tight integrated chain.

FORD manage the journey from the iron ore mine to the nished automobile in 81 hours. Famous saying about FORDs SC:

The Ford supply chain would offer any colour, as long as it was black;
& any model, as long as it was Model T. Ford innovated and managed to build a highly efcient, but inexible supply chain that could not handle a wide product variety and was not sustainable in the long run.

General Motors, on the other hand, understood the demands of the market place and offered a wider variety in terms of automobile models and colours.

Allowed the final assembly and manufacturing of key

components to be done in-house. The bulk of the components was sourced from a large number of suppliers who were part of the Keiretsu system. Keiretsu refers to a set of companies with interlocking business relationships and shareholdings. Long-term relationships with all the suppliers.

Customization
Dell did not believe in long-term relationships with suppliers. Working with world-class suppliers with technology and cost

leadership.

Medium-term relationships with suppliers. At Dell, the trigger for supplier orders was the actual orders by

customers, and not forecasts.

This helped Dell in reducing the inventory signicantly, allowing them to respond to any changes in the market place.

 Classified

into:

Design decisions Operations decisions.

Supply chain design (Network design) or strategic decisions involve the following critical issues:

What activities should be carried out by the nodal rm and what should be outsourced?

How to select entities/partners to perform outsourced activities. what should be the nature of the relationship with those entities? Should the relationship be transactional in nature or should it be a longterm partnership?

Decisions pertaining to the capacity and location of the various facilities.

Both tactical and operations decisions involve the following

areas:
Demand forecasting Procurement planning and control Production planning and control Distribution planning and control Inventory management Transportation management Customer order processing Relationship management with partners in the chain

Proliferation in product lines

Shorter product life cycle

Higher level of outsourcing

Shift in power structure in the chain Globalization of manufacturing

Improvement in Communication and IT Entry of Third-party Logistics Providers Enhanced Inter-firm Coordination Capabilities

Challenging Factors are inventory management and low cost logistics economic environment taxation structure and also the geography of India

A firm must ensure a smooth fit between its business strategy and supply chain strategy Well managed firms identify and develop external market opportunities and internal supply chain capabilities

To determine the revenue and contribution potential of increased customer service, company will need to conduct market research.

From a supply chain perspective, customer service consists of the following four dimensions: Order delivery lead time Responsiveness Delivery reliability Product variety

Order delivery time is the time taken by the supply chain to complete all the activities from order to delivery.

A critical characteristic of the supply chain is the customer order penetration point or decoupling point. Three types characterised by customer order penetration point.

Order delivery lead time also can be used for drawing a push-pull boundary of the supply chain. All the process in SC are divided into two categories with respect to customer order point.

Responsive Supply Chains: respond quickly as new products are introduced and as demand changes.
Efficient Supply Chains: focus on operating efficiently to minimize costs.

Types of Supply Chains -- Continued

Exhibit 5.5: Responsive vs. Efficient Supply Chains
Responsive Supply chain for Efficient Supply chains innovative product functional products
Closely integrated in production planning and control, quality management, service, after-sales support. Track work-in-process and finished goods inventory. Share more information. Use system wide measures of end-usecustomer satisfaction. Suppliers are evaluated based on product development time, geographic proximity, lead time, and cycle time.

for

Use traditional criteria for evaluating suppliers. Place high value on integrity, commitment, reliability, and consistency. Value suppliers for ability to provide cost savings, reduce downtime, and reduce inventory.

Supply Chain Performance Measures: Cost Versus Service

Cost Service
Order delivery lead time Responsiveness Delivery reliability Product variety

Supply Chain Performance Measures

Cost of service Low Service Level

High

Achieving Strategic Fit: Wishes vs. Capabilities

Responsive (high cost) supply chain

Gourmet dinner <High margin>

Responsivenes spectrum

Efficient (low cost) supply chain

Lunch buffet <Low margin> Certain demand Implied uncertainty spectrum Uncertain demand

Managing Supply Chains Efficiently

Inefficient Practices

Existing Position

Cost Low Service Level

High

Market-Responsive Process Primary purpose Respond quickly to unpredictable demand to minimize stockouts, forced markdowns, and obsolete inventory Deploy excess buffer capacity for flexibility Deploy significant buffer stock of all stock items Invest in ways to reduce lead time Select primarily for speed, flexibility, and quality Use modular design to postpone product differentiation

Manufacturing focus Inventory strategy Lead-time focus Approach to choosing suppliers Product-design strategy

The Four Drivers of Supply Chain Performance

Inventory "stockage" exists in all supply chains because of a mismatch between supply and demand Inventory plays a significant role in a supply chain's ability to support a firm's competitive strategy A supply chain manager must make routine decisions to create a more responsive and more efficient supply chain

Transportation moves the product between different locations in a supply chain Transportation is prominent in a company's competitive strategy The fundamental trade-off for transportation is cost (efficiency) versus speed (responsiveness)

Facilities include all locations in the supply chain to store, assemble, or fabricate inventory Decisions regarding location, capacity, and flexibility of facilities significantly affect supply chain performance In DoD, depot and field repair facilities are cornerstones of the supply chain

Information serves as the connection between the supply chain's various stages
Information and information systems are an important part of balancing responsiveness versus efficiency Businesses must trade-off between efficiency and responsiveness when trying to include more supply chain information