Supply Chain Management

Changing Business environment

Global elements.

• Consumers taste and preference has

changed.
• Demand supply.
• Powerful economic alliance.
• Opening of eastern block countries
and European union.
 Government influence

• Deregulation
• Tax and duty structure.
• Exemption for SSI.
• Environmental protection laws
 Macro economic factors
• Interest rates.
• Exchange rates
• Inflation rates.
• Saving rates.
• Trade deficit / surplus.
• Budget deficit / surplus.
Technological innovation

• Process innovation
• Industrial disasters
• IT revolution
This resulted in,

• Threat to new entrants

• Bargaining power of the buyer
• Bargaining power of supplier
• Threat of substitute
Further it resulted in,

• Expansion of business.
• Merger with another company.
• Acquisition with another company.
• Strategic alliance.
 Traditional S.C.M. approach – MRP AGE

Supplier Others Planning Production Sales Customer

 MRP – II Resource planning

Supplier Others Plan / purchase / Production Sales

Customer
 S.C.M. approach – ERP age
Supplier Manufacturer Dist. Center Retailer Consumer
 Modern S.C.M. approach
Supplier Manufacturer Distribution center Retailer Consumer
 Concept of S.C.M.
• The primal focus of SCM is to serve
consumer with excellent goods &
services against minimum possible
costs and minimum time.
• All the trading partners in supply chain
share long term mutually beneficial
vision
• All the SCM decisions are inter-dependent
amongst the trading partners.
• SCM is the demand driven situation where
consumer defines his requirements and
orders. Hence the demands generated in
SCM are either based in the live consumer
order or the past consumer orders.
• SCM strongly adheres to the lean thinking,
thus the manufacturing philosophy will be
single piece flow & batch size reduction.
• SCM performs is heavily based on
sophisticated IT systems & knowledge
workers
 Definition
A supply chain consists of all the entities
necessary to transform ideas into
delivered products or services.Supply
chain management directs and
transforms a firm’s resources in order to
design, purchase, produce and deliver
high quality goods and services.
• Supply chain management I a paradigm
driving many businesses.
• After globalization push business is
replaced by pull business.
• Supply chain consists of, all parties
directly or indirectly, fulfilling customers
request.
• Supply chain management encompasses
all activities with the flow of
transformation of goods from raw material
stage through end users as well as
associated information flows.
• Information flows in up & down
direction.
• Directly involved in Supply chain
management activity are :-
a) Customer.
b) Retailer.
c) Distributor.
d) Manufacturer.
e) Supplier.
• Indirectly involved in Supply chain
management are :-
a. Product development.
b. Marketing.
c. Operations.
d. Finance.
e. Human Resource.
f. Customer service.
S.C.M principles :-
• Compress the structure by reducing no
of members in the chain.
• Speeding up the activity – reducing the
time between two activities.
• Integrate the activities – pooling them.
• Collaborate & co-operate
Key elements of S.C.M. :-
• Production – what, when & how many to
produce.
• Supply – what can be supplied
economically & efficiently & of the good
quality.
• Inventory – levels at raw material, work in
progress, finished goods.
• Location – place of production, tax
structure, distribution modes etc
• Transportation for smooth supply
Air – ship – railway – road. This needs
to be reviewed from time & expense
point of view.
• Information – Linking of computers
through networks and Internet and
streamlining the information flow.
a. MRP.
b. SAP.
c. ERP etc.
Benefits of S.C.M.

• Reduced supply cost.

• Reduction in throughput time.
• Better returns on investment.
• Improved customer service.
• Reduction in inventory.
• Improved profit margins.