WHY SUPPLY CHAIN MANAGEMENT-1

Traditionally marketing , distribution planning, manufacturing and the purchasing organizations along the supply chain operated independently. These organizations have their own objectives which are often conflicting. Marketings objective of high customer service and maximum sales revenue conflicts with the manufacturing and distribution goals. Many manufacturing operations are designed to maximize production and lower costs with little consideration for the impact on inventory levels and distribution capabilities

Customer

What is SCM?
Supply chain management (SCM) systems coordinate the movement of products and services from suppliers to customers (including manufacturers, wholesalers, and retailers). These systems are used to manage demand, warehouses, trade logistics, transportation, and facilities, as well as the movement and transformation of materials on their way to customers. SCM applications link people and organizations (and their activities) to information and resources. The ultimate goal is for all components of the chain to exchange information with maximum efficiency and effectiveness, in order to obtain best results for all parties.

SCM applications link people and organizations (and their activities) to information and resources. The ultimate goal is for all components of the chain to exchange information with maximum efficiency and effectiveness, in order to obtain best results for all parties. A comprehensive SCM solution allows you to focus on and optimize key components of your supply chain operations: demand management order management warehouse management production and supply planning service parts planning supplier relationship management supply chain event management international trade logistics transportation management
The difference between managing these components effectively and mismanaging them can mean the difference between success and disaster.

Supply Chain Management

Supply Chain Strategy Supply Chain Planning Supply Chain Execution

OBJECTIVES OF SUPPLY CHAIN MANAGEMENT

Objectives of Supply Chain Management are to optimize pre and postproduction inventory levels, obtain greater efficiency from labour, equipment and space across the company and provide flexible planning and control mechanisms. Supply Chain management strives for a single chain of supply having the following objectives: Controlled customer service performance Reduction of pre and post-production inventory Minimum variance (Standardization) Minimum total cost of operations and procurement Product quantity control Maximum efficiency in using labour, capital and plant through out the company Flexible planning and control procedures

Components of Logistics
Logistics Materials Management Manufacturing & Supply Service Physical Distribution

Customer Service

Suppliers
Raw materials Sub assemblies Manufactured parts Packing materials

Inbound
Materials flow

Work In Progress

Finished Goods & parts

Outbound

Inventory In the field

Finished Goods

Transit depot Productions

Intermediary

Customers
*OEMS *End Users * Govt.

ELEMENTS
Managerial activities

OF

LOGISTICS
Regular activities

Transportation Demand Forecasting Waste Management Inventory Planning & Control Ware housing Order Processing

LOGISTICS

Packing and Shipping Customer Service

FRAME

WORK OF

LOGISTICS
Internal Operations Physical Distributions

Physical Supply

Logistics is concerned with getting products and services where they are needed, when they are needed. When a consumer goes to the store he not only expects the products available but also expects them to be fresh. This is impossible with out logistics. Thus logistics is an activity which never stops and rests. Its an activity which is carried out 24 hours a day & 365 days a year.

DIFFERENCE BETWEEN LOGISTICS & S C M

Logistics management activity is supply driven ( cost minimization with respect to known or specific demand target & efficiency focused). Its can be viewed as a logical extension of transportation & related area to achieve an efficient and effective goods distribution system. Supply chain management is more demand driven ( profit maximization with some resource constraints at a broad level and effectiveness focused) S C M tries to capture the dynamic nature of the value creation itself ( by looking at several competitive elements such as responsiveness , quality and design and therefore aims for an effective management response over a longer run. In this context profit maximization over the long run ( with flexibility of investment and restructuring if required) emerges the major goal of S C M rather than cost minimization , which is really on one of the factors contributing to profit maximization.

LOGISTICS MANGEMENT ACTIVITY

Logistics management activity is supply driven ( cost minimization with respect to known or specific demand target & efficiency focused). Its can be viewed as a logical extension of transportation & related area to achieve an efficient and effective goods distribution system. Logistics deals with the efficient management of the static gap between demand and supply in localized sense. Logistics consists of seven Rs Right product , Right qty , Right condition , Right place , Right time , Right Customer , Right price - this common definition covers functions performed by logistics ( Time & place utilities , product movement and storage and price & customer services are all specified)

SUPPLY CHAIN MANAGEMENT ACTIVITIES

SCM is the combination of art & science that goes Into Improving the way a company finds the raw materials And components it needs to make a product or service,Manufacture s that product or create service & delivers It to company and customers Activities involved in the supply chain : PLAN , SOURCE , MAKE , DELIVER , STORE & RETURN

What is Supply Chain Management?-1

A supply chain is a network of facilities and distribution options that performs the function of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to the customers. Supply chain exists in both services and manufacturing organization, although the complexity of the chain may vary greatly from industry to industry and firm to firm - Hau L Lee and Corey Billington Supply chain consists of all parties involved , directly or indirectly , in fulfilling a customer request. The supply chain not only includes the manufacturer and supplier, but also transporter , warehouse , retailers and customer themselves. Within each organization, such as a manufacturer, the supply chain includes all functions involved in receiving and filling a customer request.

Supply Chain Management concept eliminates this interfunctional protectionism drive, by accepting the whole supply chain as a single entity . All functions along the chain share the common objective of supply and are involved in strategic decision-making. The emphasis is on integration rather than on interfaces between the different functions. The Supply Chain becomes responsible for total inventories in the supply pipe line and also for satisfying customer needs and expectations while meeting all agreed customer service parameters and company targets.

Finance/ Accounting Production Operations Engineering

Human Resource Mgt

Marketing

INTEGRATED LOGISTICS SYSTEM Inbound Logistics Conversion Operations Primary Logistics Activities Outbound Logistics

Transportation Facility Inventory Matls Hldg

Comm & Inform.

Primary Service Response Logistics Activities

Waiting time
Suppliers

Capacity

Delivery

Customers The Integrated Logistics Process

DEFINITION : SUPPLY CHAIN MANAGEMENT Supply Chain may be defined as the network consisting of Customer, Retailer, Distributor, Manufacturer and Supplier, closely linked through efficient flows of, y Material, involving physical product flow from Supplier to the End-customer including reverse flow of returns for servicing and repairs. y Information, involving Customer order receipts in the Supply Chain to delivery from the warehouse till goods reach the End-customer. y Finance, involving credit terms, payment schedules, change of title and ownership arrangements, penalties, etc. at every stage in the Supply Chain.

SUPPLY CHAIN CHARACTERISTICS - 1

In a company the Supply Chain links the Customer orders/ expected orders (Sales forecast) with finished product Availability, from Production Availability and from Supplier Availability. The link is so fine tuned that any change in the status in any of the stages gets reported throughout the link immediately, enabling corrective actions and adjustments at every stage, without any loss of time.

SUPPLY CHAIN CHARACTERISTICS - 2

The Supply Chain organization has an active role in improving the bottom line of the company by taking advantage of its systematic influence upon the 3 cost categories, y Material costs Raw material Semi-finished goods (WIP, working in progress) Finished goods Indirect material y Working capital costs Interest on all material and goods Depreciation / value adjustments y Overheads IT expenses Supply Chain organizations try to set free capital tied up in inventories in the whole pipeline from Supplier to Customer without sacrificing the desired levels of customer service

THE SUPPLY CHAIN MANAGEMENT CONCEPT

The process of planning, organizing and controlling the flow of materials and services from supplier to end users / customers. This integrated approach incorporates Suppliers, Supply management, Integrated Logistics and Operations. When you manage a supply chain,you co -ordinate, Supply management, Operations & Integrated logistics into a seamless pipeline to maintain a continual flow of product & services. Marketing links the customer, the departmental function and supply chain management itself. Marketing analyzes changing trends, potential market volumes, competitors price etc. Marketing then routes information to the other department so they can determine how & when to meet the customer demand. 1

THE SUPPLY CHAIN MANAGEMENT CONCEPT

Marketing along with supply management , operations and integrated logistics work to : 1. Co ordinate the outsourcing of materials. 2. Manage bottle necks and reduce the impact on customer. 3. Co ordinate the smooth and continual flow of product and services into, through, and out of the firm. S C M begins with intensive cost negotiation to obtain long term agreement with Tier 1 and 2 suppliers, S C M will classify suppliers as approved, preferred or alliance. S C M may use competitive quotes and price analysis as the best method to conduct business. Concepts may be 1. Target Pricing or Cost Design
2

THE SUPPLY CHAIN MANAGEMENT CONCEPT Tactics to implement S C M Includes :

Developing strong relationship with supply chain management members. Developing high quality products and services. Sharing information among supply chain management members. Reducing the order cycle time. Minimizing inventory levels across the supply chain. Reducing the numbers of suppliers and carriers. Building commitment to supply chain management Model implies a need to understand total cost of ownership, You minimize fragmentation and sub optimization of product/ services flow.