Charles Darvin said-

It is not the strongest,

who would survive
– over a period of time,

but
– the flexible and fittest.
 Transition phases
of
Manufacturing Sector

Evolution of Supply Chain Concept

Transition phases of Manufacturing Sector

• Craft Production
• Mass Production
• Lean Production
• Customized Production
 VALUE MATRIX

1990
Up to 1920 1920 - 40 1940 - 80 1980 - 90
Onwards

HC
MARKET CAPACITY HC HC
HC CC
ENTRY TO + CC
PRODUCE TQM
PARAMETERS CC TQM
Delivery

HIGH HC
HC HC
HC
MARKET CAPACITY + CC CC
CC
LEADERSHIP TO COST TQM TQM
PRODUCE COMPETANCY +
PARAMETERS + Delivery
(HC) (CC) Quality
DELIVERY VALUE

TQM ERP CRM

Drive
Competition & Customer Retention
“ In today’s competitive environment
(wherein
there are many suppliers,
all giving equal offerings & quality)
the customer has a choice to switch over.

Q - How would you retain your customer ?

( Remember – Real Profit comes only from Repeat Sale. )

‘ Customer Value ’ Concept

Capability required for

Market Entrance and Market Leadership
has changed from

“Ability to Supply”
to
“Ability to Add More & More Value” to customer
 Quality Service
Value = ---------- X ---------
Cost Time

Value Addition activities come by -

• Adding benefits / uses

• Reducing cost
• Defect-free Quality
• Right Time Delivery
Q – Can SCM help in “ Value Creation Activities”?
 What is Supply Chain ?

Sub- Final Stock as Pack &

Design Procure Fabricate Test
assemble assemble Inventory Ship

Is it possible to manage this supply chain ?

Manuf actur ing Envi ronm ents

• Make to Stock ( MTS )

• Assemble to Stock ( ATS )

• Make to Order ( MTO )

• Engineered to Order ( ETO )
 Make to Stock ( MTS ) Environment

Customer Order

Sub- Final Stock as

Design Procure Fabricate Test Pack & Ship
assemble assemble Inventory

L.T.

Customer doesn’t have to wait

FG manufactured before Customer Order
He has a choice to select/ reject
Hence “ Pushing the Sale “ philosophy
 Assemble to Stock ( ATS ) Environment

Customer Order
(CODP)

Final
Stock
assemble
Design Standard
Sub- The Pack &
(Modular Procure Fabricate Modules Test
assemble Customer Ship
Product) as
Selected
Inventory
Modules

L. T.
Key components are planned & stocked in anticipation of Customer Order
CODP ignites the assembly of Customized Product
 Make to Order ( MTO ) Environment

Customer Order
(CODP)

(Customer
Stock
design, if
component Pack
required) Sub- Final
Design Design & Fabricate Test &
Procedure assemble assemble
Standards Ship
(Componen
Parts
ts & RM)

L. T.

Goods & Services to be manufactured after receipt of customer order

Adv. – Customer gets more options , Manufacturer curtails inventory
 Engineered to Order (ETO) Environment

Customer Order
(CODP)

Design Procure
(Unique Engg. (RM,
Sub- Final Pack &
Design or Standard Fabricate Test
assemble assemble Ship
significant components
customization) etc.)

L. T.

Highly customer focused environment requiring

Unique Design, Significant Customization
 Flows in a Supply Chain

Materials & credit

Consumer
2nd Tier
Supplier
Distributors/
Dealers Small to
2nd Tier
Supplier Midsize
Anchors Companies
1st Tier
2nd Tier Supplier
Supplier Large
Companies

Orders & cash

 Supply Chain
( Martin Christopher)

The supply chain is the network of

organizations that are involved, through
upstream and downstream linkages, in the
different processes and activities that
produce value in the form of products and
services in the hands of the ultimate
consumer.
 SCM & Vertical Integration

Supply chain management is not the same as

‘vertical integration (normally implies ownership of
upstream suppliers and downstream customers).

Vertical Integration was once thought to be a

desirable strategy but increasingly organizations are
now focusing on their ‘core-business’ – in other
words the things they do really well and where they
have a differential advantage. Everything else is
‘out-sourced’ – in other words it is procured outside
the firm.
How the focus on Production Methodology got shifted
Tiered Production
 PRESENT FUTURE
Time

Levels Levels

Size
Size Network

Tall and Broad based Small and flat Functional Network based
structure with many structure with few Organization with structure
levels levels coordinators process