SUPPLY CHAIN

MANAGEMENT (SCM)

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SCM: CONCEPT
Supply chain is a chain of activities describing the flow of
materials/goods from suppliers to the end user.
In other words supply chain is an integrated approach or flow of the
goods movement from suppliers to the end users.
Major players involved along with this chain are suppliers, warehouse,
manufacturers, logistics department or the transport department,
customer or distributor.

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 Supply chain management is to ensure seamless flow between

many entities and ensure delivery of goods to the customer.

Ultimate objective to manage the flow seamlessly is to attain the

level of synchronization between all the players that will make
organization more responsive to customer needs while lowering
costs and hence more competitive.
Role of SCM is to design efficient processes in the various
business functions such as procurement, warehousing,
transport, etc. plan and execute the activities at the different
stages.

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Supply chain in Manufacturing

Supply chain in manufacturing is largely depending on the logistics and

supplier network to supply basic raw materials and then transport it to the
organization for manufacturing purpose.
Manufacturing supply chain is largely dominated by:
Supply network to supply raw materials
Logistics network to take care of transportation of material from the
supplier to warehouse and from warehouse to customer.
Warehousing operation to inspect, stack and issue the raw material and
keep track of inventory. Once the finished goods are manufactured,
warehouse should also prepare a proper packing list, packages to load
them so that these can be transported to the customer and should receive
the acknowledgement.

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SCM IN MANUFACTURING

Manufacturing supply chain is largely dominated by

Supply and logistics network to supply of raw materials. Warehousing operation to
inspect, stack and issue the raw material and keep track of inventory. Warehouse is also
to ensure once the finished goods are manufactured prepare a proper packing list,
packages to load them to transport to the customer and receive the acknowledgement

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Contd..
The primary supplier may interacts with the secondary suppliers(tier-2
and tier-3) to procure the material and to deliver it to the organization.
Receipt and movement of the goods are handled by logistics to deliver
to inventory section. Inventory section inspects and logically places the
material at a proper location. It also keeps the track of all the raw
materials and then issues them to the manufacturing facilities.
Manufacturing facilities take up the processing of raw materials and
make the finished goods to receive them in another part of inventory
section. Packing slip and the packaging unit are required to take over
the process of dispatches to the customer.

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Supply chain in Retail

Primary suppliers like Hindustan Unilever(HUL), Proctor
and Gamble(P&G), Godrej, etc. supply their products to
the distributors. The distributors based on the demand,
supply them to the supplier markets like Big Bazaar, Hyper
City, etc.Retail customers or walk-in customers and local
stores pick goods from the super markets for further
consumption or distribution.
For example as shown in fig. In case of vegetables few of
the super markets are directly linked with the farmers for
the supply. This is to encourage farmers to get the better
price and the end customer also gets benefitted with the
fresh and cheap vegetables.
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SUPPLY CHAIN IN RETAIL

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Supply chain Evolution

Logistics is the core of supply chain and the activities of logistics are centuries
old. Importance of logistics was realized by the farm products distributors in
early 1900s.
Around the same time in 1905, the word logistics was brought in picture by
military to focus the timely movement of supply of armies, weapons etc.
In 1950s, there was a boost production and the manufacturing sector was
getting peak attention. The inventory became the responsibility of the
marketing, accounting and production areas. Order processing was the part of
accounting and sales. This was a typical example of working in isolation in
which each of the department is having its own objectives and goals to
achieve.
Productivity and the quality wave saw the prominence in 1960s and 1970s.The
term supply chain management was first introduced by Keith Oliver,a
consultant at Booz Allen Hamilton, in 1982.However, it gained its importance
in late 1990s.
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EVOLUTION OF SUPPLY CHAIN

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Major issues seen in achieving effective supply chain

management
Customers give shorter order lead time with low prices and
hence,SCM built a risk of higher inventory to avoid the
stock-out situation.
Lack of technology support. IT systems/processes are
either outdated or not capable enough to address the
challenges of supply chain.
Building up strong supplier network.
Sales channels/distributors carry low inventory and the
demand is fluctuating and quick.
Trained manpower responds to the quick need of the
customer and optimize the delivery period at a reasonable
cost.
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SCM COMPONENTS

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Contd..

The customer is seemed to be the first driver of the supply chain.The

customers have many ways for buying such as different outlets, vendors,
internet websites etc. and they are also knowledgeable enough about the
product. Along with the price and quality, availability of the product is also
important.
Supply chain must have built-in intelligence about the demand(demand could
be seasonal and let the past history drives entire intelligence about the
demand).Demand would drive the sourcing pattern. Sourcing must ensures
competitive prices of buying and has an effect on selling price.
Effective warehousing and transportation is also termed as logistics that plays
a crucial role in supply chain.
Supply chain management is a logical extension of enterprise resource
planning(ERP) systems and must ensure seamless information flow between
all the players involved in the chain. Further, IT systems are able to deliver
reports related to regulatory compliance.
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SCM BENEFITS
Efficient Supply Chain Network
Supply chain implementation brings in 360 visibility across the entire supply chain
network.
It tracks and manages all the activities across all the components of supply chain, namely
suppliers, production centres, warehouses and distribution channels.

Optimize Delivery Performance

Successful implementation of SC brings in value additions in achieving on time deliveries
and finally, maintains the satisfied customer.

Cost Reduction
One of the most importance objectives of SCM is to reduce the cost relating to inventories
by having improved inventory management function.
Inventory models like just-in-time (JIT), arriving at the proper inventory levels will reduce
the financial burden of overstocking of the material. This will have further impact on
achieving the reduction in production cost and the benefit is passed on to the customer.

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SUPPLY CHAIN: IT PRODUCTS

Expectations from the IT Products

SN

Expectations from the Business

Expectations from the Applications

Continued focus on cost cutting

Better contract management

More automation
Improved performance reporting

Realtime collaboration

Compliance with standards

Increased visibility

Accountability

Accurate performance measures

Compliance support

Alignment between SCM and CRM

Business flows that cross organizations

Unified information architecture
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SCM: PRODUCT FOOTPRINT

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SCM: PRODUCT FOOTPRINT

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CASE STUDY

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THANK YOU

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