WHAT IS SUPPLY CHAIN MANAGEMENT

" Is the strategic management of activities involved in

the acquisition and conversion of materials to finished
products delivered to the customer"

Supplier Material Flow Customer

Management Management
Information Flow

Schedule /
Conversion Delivery
Resources Stock
Deployment
 DEFINITION
 Supply chain is the system by which
organizations source, make and deliver
their products or services according to
market demand.
 Supply chain management operations
and decisions are ultimately triggered by
demand signals at the ultimate
consumer level.
 Supply chain as defined by experienced
practitioners extends from ‘suppliers to
customers’.
 Supply chain objectives may differ
from situation to situation.

 For functional products, cost

efficiency is the critical factor.

 For innovative products,

responsiveness is the important
factor.
 SUPPLY CHAIN MANAGEMENT
Suppliers Manufacturers Warehouses & Customers
Distribution Centers

Transportation Transportation
Costs Costs
Material Costs Transportation
Manufacturing Costs Inventory Costs Costs
5
The Supply Chain – Another View

Plan
Plan Source
Source Make
Make Deliver
Deliver Buy
Buy

6
 SCM

 Supply side- raw materials, inbound

logistics and production processes

 Demand side- outbound logistics,

marketing and sales.
 Supply Chain Management
A set of approaches used to efficiently integrate
 Suppliers
 Manufacturers
 Warehouses
 Distribution centers

So that the product is produced and distributed

 In the right quantities
 To the right locations
 And at the right time

Costs are minimize and requirements are satisfied

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 SUPPLY CHAIN INCLUDES

 MATERIAL FLOWS

 INFORMATION FLOWS

 FINANCIAL FLOWS
 SUPPLY CHAIN DRIVERS

Why sudden interest?

– Demanding customers
– Shrinking product life cycles
– Product offerings
– Growing retailer power in some cases
– Core competency
– Emergence of specialized logistics providers
– Globalization
– Information technology
 THE STEPS INVOLVED

 Step 1- Designing the supply chain

 Step 2 - Optimizing the supply chain

 Step 3- Material flow planning

Step 4 - Transaction processing

 Information flows in Supply Chain
Management

• Information is overriding element

• Need for databases
• Master files: Information about customers, products,
materials, suppliers, transportation, production and
distribution data- do not require frequent processing
• Status files- heart of transaction processing- track
orders and infrastructure status- updated daily.
• Essentially using the same information to make all
plans right from structuring the network to
processing every day supply chain tasks.
Critical Success Factors
today

• Cross functional management and

planning skills
• Ability to define, measure and
manage service requirements by
market segment
• Information systems
• Relationship management
 PUTTING IN PLACE A WELL OILED SUPPLY
CHAIN

 Supply chain as an efficient customer

satisfying process

 Effectiveness of the whole supply chain is

more important than the efficiency of
each individual department.
 Supply Chain Goals

Efficient supply chain management

must result in tangible business
improvements. It is characterized by
a sharp focus on

 Revenue growth

 Better asset utilization

 Cost reduction.
 Supply Chain
Management

Compression (Planning/Manufacturing/Supply)
Conformance (Forecasts/Plans/Distribution)
Co-operation (Cross -Functional)
Communication (Real Time Data)
 SUPPLY CHAIN ELEMENTS
• Supply Chain Design
Strategic • Resource Acquisition
• Long Term Planning (1 Year ++)

• Production/ Distribution Planning

• Resource Allocation
Tactical
• Medium Term Planning (Qtrly,Monthly)

• Shipment Scheduling
Operational • Resource Scheduling
• Short Term Planning (Weekly,Daily)
 Global supply chain
management
Global supply chains pose challenges regarding both quantity and
value:

Supply and Value Chain Trends

•Globalization

•Increased cross border sourcing

•Collaboration for parts of value chain with low-cost providers

•Shared service centers for logistical and administrative functions

•Increasingly global operations, which require increasingly global

 Why Is SCM Difficult?

Uncertainty is inherent to every supply chain

 Travel times

 Breakdowns of machines and vehicles

 Weather, natural catastrophe, war

 Local politics, labor conditions, border

issues
 Points to keep in mind

 Recognize the difficulty of change.

 Prepare a blueprint for change that maps
linkages among initiatives.
 Assess the entire supply chain from supplier
relationships to internal operations to the
market place, including customers,
competitors and industry as a whole.
 THANK
YOU