SUPPLY CHAIN MANAGEMENT

MEANING
Supply chain management (SCM) is the
management of a network of interconnected
business involved in the ultimate provision of
product and service packages required by end
customers. Supply chain management spans all
movement and storage of raw materials, work-in-
process inventory, and finished goods from point of
origin to point of consumption .
 DEFINITION
Supply chain management is the systemic,
strategic coordination of the traditional business
functions and the tactics across these business
functions within a particular company and across
businesses within the supply chain, for the purposes
of improving the long-term performance of the
individual companies and the supply chain as a
whole
 DEFINITION
 According to the Council of Supply
Chain Management Professionals(CSCMP),
supply chain management encompasses the
planning and management of all activities
involved in sourcing, procurement, conversion,
and logistics management. It also includes the
crucial components of coordination and
collaboration with channel partners, which can
be suppliers, intermediaries, third-party service
providers, and customers.
 What is SCM ?

SCM is a business network covering from buying, making, moving, warehousing to

selling

Making
Making
Moving
Moving

Buying
Buying

Selling Ware
Ware
Selling
housing
housing
 Dynamics of Material Flow

Supplier Plant RS Logistics Retailer

Traditional SCM
 Supply Chain Benefits

 Cost
 Reduced inventories

 Reduced waste

 Reduced total system costs

 Service
 Establishment of a collaborative framework

 Near real time information flow

 Reduced variation and increased quality
 Business growth opportunities
 Preferred source for new opportunities
 Expanded benefits to other customers
 Potential Benefits from SCM
 Increased market share and sales growth
 Reduced inventory levels and total SCM costs
 Decreased order cycle/fulfillment time
 Increased asset and capital utilization
 Improved delivery performance
 Faster response to changing customer requirements
 Improved return on assets and sales
 Increased forecast accuracy
 Reduced cash-to-cash cycle time
 ELEMENTS OF SCM

 INVENTORY MANAGEMENT
 WAREHOUSING
 TRANSPORTATION
 What is inventory

1. The stock of material lying with you for which

payments are made but which are yet to be
delivered to the customers and paid for by
them.

2. Material stocked to meet the expected demand

in the market.

3.An idle resource which locks the capital.

 Features of a good warehouse

1. FMFO – First Manufactured and First Out principle.

2. Maintenance of prompt and correct records.
3. Fast and courteous service to customers.
4. Minimum damages to the material.
5. Place for everything and everything in its place.
6. Protection against pilferage.
7. Regular verification and inspection of material.
8. Regular inventory taking and reconciliation.
9. Maintaining inventory within specified norms.
 Logistics Management

 'Logistics is the process of strategically

managing the procurement, movement and
storage of materials (and related information
flows) through the organization and its
marketing channels
 Objectives of Transport Management

1. Cost Optimization
2. Improved service
3. Transportation/logistics as a competitive
differentiator.
4. Time to market
 Supply Chain Strategy
 “Companies are investing resources--of both
time and capital--to improve their supply chain
capabilities. But many are not pleased with the
return on these investments. The lack of
coherent supply chain strategy typically lies at
the root of the problem.”
 SC Relationship Barriers
 Lack of Trust
 Little Understanding or Commitment to SC
Principles
 Fear of Relinquishing Control
 Different Goals & Objectives
 Inadequate Information Systems
 Short-term / “Wall Street” emphasis on
outcomes
 Involvement in too many supply chains
SC Relationship Barriers--Solutions
 Develop a New Breed of Manager
 Build “Relationship-Management” Skills
 Establish Inter-organizational Teams
 Create New Performance Measures
 Invest in Information Technology
 Develop Long-term Focus (Boards, too)
 Engage in More Practical and Applied
Research
 Problems addressed by supply chain
management

 Distribution Network Configuration:

 Distribution Strategy:
 Trade-Offs in Logistical Activities:
 Information:
 Inventory Management:
 Cash-Flow:
 Activities/functions

 Strategic level
 Tactical level
 Operational level
 Strategic level

 Strategic network optimization, including the

number, location, and size of warehousing,
distribution centers, and facilities.
 Strategic partnerships with suppliers,
distributors, and customers, creating
communication channels for critical
information and operational improvements
such as cross docking, direct shipping, and
third-party logistics.
 Tactical level

 Sourcing contracts and other purchasing

decisions.
 Production decisions, including contracting,
scheduling, and planning process definition.
 Inventory decisions, including quantity,
location, and quality of inventory.
 Transportation strategy, including frequency,
routes, and contracting.
 Operational level

 Daily production and distribution planning,

including all nodes in the supply chain.
 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.
Supply chain business process integration

 Successful SCM requires a change from

managing individual functions to integrating
activities into key supply chain processes
 Supply chain business process integration
involves collaborative work between buyers
and suppliers, joint product development,
common systems and shared information.
 Components of SCM Integration

 Planning and control

 Work structure
 Organization structure
 Product flow facility structure
 Information flow facility structure
 Management methods
 Power and leadership structure
 Risk and reward structure
 Culture and attitude
Tax efficient supply chain management
 Tax Efficient Supply Chain Management is a
business model which consider the effect of Tax
in design and implementation of supply chain
management. As the consequence of
Globalization, business which is cross-nation
should pay different tax rates in different
countries. Due to the differences, global players
have the opportunity to calculate and optimize
supply chain based on tax efficiency legally. It is
used as a method of gaining more profit for
company which owns global supply chain.