1. sc - understanding

8/4/2019 1. SC - Understanding

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Understanding the Supply Chain

(SC)Learning Objectives :

Understanding Supply Chain

Key SC decisions

Cycle & Push/Pull Views of SC SC macro processes


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Customer Value

Availability

Variety

Quantity

Price

Quality


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Creation of customer value

Functions : Marketing, Manufacturing,Distribution, etc

Each with their own goal with an objectiveto satisfy customer / create value forcustomer but at times their goals contradict

SCMintegrate these functions

build relationships


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Definition of Supply Chain

ManagementA supply chain is the stream of processes of moving

goods from

customer order through the raw materials stage

Supply

Production

and distribution of products to the customer

Material and information flow Up and Down the Supply

Chain


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Supply Chain Management

Management of

C2 = Effectiveness - Customer

C2 = Efficiency - Cash


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A Generic Supply Chain

Raw material suppliersExtract RMs from ground say iron ore

Raw Material ManufacturersMetal sheets

Intermediate component manufacturersElectric wire

End Product ManufacturersGeneral Motors

Wholesalers, Distributors

Retailers

Satisfy END CONSUMERS

Service providerstrucking, airfreight shipping companies, informationsystem providers, public warehousing firms, freight forwarders, agents andconsultants

Reverse Logistic ActivitiesProduct returns and recycling, warrantyrepairs


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What is a Supply Chain

Motive - Fulfillment of Customer order

FlowsInformation, Cash, Material

Chain - Suppliermanufacturer

distributorretailer = Customer order

Supply network or supply web

Objectivemaximize profitability of the

chainmanagement of flows


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Supply Chain


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Key attributes of SCM

CUSTOMERSERVICE

VARIETY

PRICE

SPEED

RELIABILITY

QUALITY

SCM


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Why Supply Chain Management

To provide an uninterrupted flow of materials,

supplies and services required to operate the

organization Keeps inventory investment at a minimum

Maintain and improve quality

Find or develop competent suppliers Purchase required items and services at lowest

cost


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To improve the organizations competitive

position

To achieve harmonious, productive working

relationships with other functional areas

within the organization

Accomplish the purchasing and marketingobjectives at the lowest possible level of

administrative cost


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Decision phases in SC

SC strategyconfiguring SC in accordance with

the strategic objectives - location & capacities of individual facilities,different modes of transportation, information systems

SC Planningoperating policies that govern short

term operations - Forecasting in next few years for the concerned productin different markets, sources of supplies, whether outsourcing or in-house, inventory

policies, etc.

SC OperationsFulfill customer orderday today operations - allocation of inventory or production to individual orders,fixing transportation and delivery schedule of trucks, placing replenishment orders


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Process View in SC

Cycle view

Customerorder cycle

RetailerReplenishment cycleDistributorManufacturing cycle

ManufacturerProcurement Cycle

Supplier

Differences in Cycles- Uncertainty of demand

- Scale / size of order


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Process View in SC

Push / Pull view

PullInitiated by customer order

Hotel, Dell

PushInitiated in anticipation ofcustomer order

FMCG, IBM

MixedPush + Pull

Paint industryColour basepush, colour choice - pull


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Customer Order Cycle

Customer arrival - ensure customer arrival turns into customer orderanswer customer queries, ensure they do not have to wait for a long, etc

Customer order entry - customer informing what he wants andretailer allocating stock- retailer should ensure it is quick, accurate and

communicated to others in SC

Customer order fulfillment - Order is filled and sent tocustomerpicking, packing and sipping product to customer, inventories to be

updated - correct order at promised due dates at lowest possible cost

Customer order receiving-customer receives and takes delivery,payment made


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Replenishment Cycle

Retail order trigger - retailer placing order at previous stage to replenishhis stocktotal of customer orders less stock available - Economies of scale, balancing

productavailability & cost of holding inventory

Retail order entry- Retailer informing what he wants and wholesalerallocating stock - wholesaler should ensure it is quick, accurate and communicated toothers in SC

Retail order fulfillment - Order is filled and sent to retailerpicking, packing and sipping product to retailersize of these orders are quiet

large than that of customer orderinventories to be updated - correct order atpromised due dates at lowest possible cost

Retail order receiving- retailer receives stock physically and takesdelivery, payment made


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Manufacturing Cycle

Order Arrival - Plant receives order from customer / distributor

Production Scheduling - Production plan is made

Manufacturing & Shipping - Production & despatchon promised date, meeting quality stds, low costs

Receiving at distributor / retailer or

customer - Product is received physically by wholesaler / customer &fund is transferred


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Procurement Cycle

To ensure materials are available for

manufacturing as per schedule

Components are supplied against fixedmanufacturing plan


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Push / Pull View

Pull / reactive processExecution is initiated to

customer orderdemand is knownMake to

order Push / speculative processExecution is initiated

in anticipation of customer orderforecast

Make to Stock

Supply chain design depends on Push / Pull view

In pull viewNo replenishment cycle


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SC Macro Processes

CRMCustomer Relationship Mgmtfirm&customer Marketing, sales, order management, etc.

ISCMInternal Supply Chain Mgmt - internal Planning of internal production, storage capacity, demand &

supply plans, etc.

SRMSupplier Relationship Mgmtfirm&suppliers Evaluation , selection of suppliers, negotiation, buying, etc


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Success of SC

Matching demand with supplyCustomers expectations, needs w.r.tquality, qty, design, price, etc.

InventoryGood balance between inventory cost and loss of sales


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Supply Chain v/s Logistics

While supply chain involves strategies, tactics

and operations, logistics concentrates on the

actual ways and means to fulfill the overallsupply chain strategy.

Both are incomplete without each other.


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Purchasing vs SCM

Purchasing is responsible for acquisition of

required materials, services and equipment.

Inbound and outbound logistics along withpurchasing would be referred to as SCM


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Discuss

What are the advantages of moving from

Make to Stock model to a Make to order or

a Make to configure model?

1. sc - understanding

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