SCM

SCM Another View

- Flow of materials, products & Services - Flow of information

- Flow of funds
And SCM is about integration, effective communication, coordination, speed, cost, quality and flexibility.

SCM
The APICS dictionary defines the term supply chain as either the processes from the initial raw materials to the ultimate consumption of the finished product linking across supplier-user companies,
-

- Managing Supply & demand, sourcing raw materials & parts, manufacturing, warehousing & inventory, Order entry & management, Distribution & Delivery to the customer (Supply Chain Council) - A Supply Chain consists of all stages involved, directly or indirectly in fulfilling a customer request. The supply chain not only includes the manufacturer and supplier, but also transporters, warehouses & retailers --- Chopra and Meidl - An integrated process where raw materials are transformed into final products then delivered to customers. (Beamon)

-Supply chain management, then, is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. It represents a conscious effort by the supply chain firms to develop and run supply chains in the most effective & efficient ways possible. Supply chain activities cover everything from product development, sourcing, production, and logistics, as well as the information systems needed to coordinate these activities.
- SCM is the integration of key business processes across the supply chain for the purpose of creating value for customers and shareholders. - SCM is a system of people, activities, information and resources involved in creating a product and then moving it to the customer. - Supply chain management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain management involves coordinating and integrating these flows both within and among companies.

Integration

SCM

Vendor

Inbound Transport

Manufact uring

Primary Transport

Wareho using

Secondar y Transport

Custo mer

SCM another view

Marketing Excellence
Manufacturing Excellence

Purchasing Excellence

History
Before 1960 Purchasing staff considered as clerks After 1960 these were considered as professionals

They were considered due to material cost went up

After 1970 it became part of Materials Mgt. In 1980, Purchasing & Materials Mgt. became Supply Chain Mgt.

Why SCM?
- Inventory cost increasing
- Logistic cost increasing - Margins decreasing - Quality become an issue - Manufacturing efficiency - Customer service with value addition - Supplier involvement in New product design & development - Communication - Competition Under above circumstances in 1990, companies began to work with quality suppliers, involved them in New Product Development, cost saving, quality, processes, delivery, Business Process Reengineering, Waste elimination & other improvement areas. SCM rapidly increased in popularity as a source of competitive advantage for firms.

Supply Chain strategy

Maximize customer service, e.g quality, speed, cost etc

Minimize Inventory E.g ABC, JIT, VMI etc.

Minimize Operating Costs

Scope
Supplier

Purchasing
Warehouse Inventory Management

Operations
Distribution/ Logistics/Customers Information Technology Quality

Supply Chain Objectives & process

The Right SERVICE
The Right SUPPLIER The Right PLACE The Right TIME
at the with the and

The Right PRICE

paying

The Right at the QUANTITY

The Right QUALITY
with the

Todays Business Scenario

- Extremely stiff competition
- Increasing awareness exposure due to abundance of information - Lot of choices & options - Cost consciousness ask value for money - More Demanding customer - Changing loyalties & preferences

- Mergers / Competition
- Pressure for quick response - Energy crises - Law n Order - Bhutta Culture

Objectives
- Faster to market with new products & services
- Better Customer service

- Lower operational costs

- Lower inventory costs - Smooth flow of information - Open & honest communication - Waste elimination - Data Accuracy - We approach i.e. Team work

Objectives
- Developing strong relationships with chain members - Developing high quality products at lower cost - Sharing experience with external customers - Reducing order cycle time - Minimizing inventory - Maximizing flow

- Reducing number of suppliers

- Initiating small and big projects of saving - Process re-engineering - Competitive advantage

- Customer value & satisfaction

How people are reacting

- Sleeping - Observing - Waiting - Preparing - Reacting - Adapting

Old View of the World

One company does all processing, from raw material through delivery

Supply Network View of the World

Integrated networks of companies process, produce and distribute products. Every one focuses on its core activity

The Supply Chain Networking

Suppliers Manufacturers Warehouses & Distribution Centers Customers

Transportation Costs Material Costs

Transportation Costs

Manufacturing Costs

Transportation Costs Inventory Costs

Supply Chain Integration

Internal Integration Materials Mgt. ----- Manufacturing Mgt. ----- Distribution Mgt.

External Integration
Suppliers ----- Internal supply chain ----- Customers -

Backward (Supplier) & Forward (Customer) Integration

Integration
-The most difficult step - If one activity fails then supply along the chain is disturbed

- Participant realization
- Team work - One set of numbers - Discipline in forecasting - Change in attitude of upper management - Visibility to all - Open communication

Integration

Integration through Involvement Tell me and I will forget

Show me and I will remember Involve me and I will understand

Supply Managements Impact on Net Income and the Bottom Line

Best supply chain should result:

LESS
COST MACHINES EXPENSES MANPOWER REJECTION RESOURCES OVERTIME
SALE PROFIT GROWTH MARKETSHARE RETURNS CUSTOMERS

MORE

Can we compare?
Improved Less Improved

EMIRATES SONY NOKIA TOYOTA TCS SUI GAS AKU

VS VS VS VS VS VS VS

PIA LUMINAR Q Mobiles ADAM MOTORS PAK. POST KESC CIVIL

Issues in Supply Chain

-Product Oversell
- Product Withdrawal - Product Launch/ Demand increased - Abnormal Demand / Seasonality - Reduced / Cancelled Orders - Changes in Demand/supply Schedule - Discontinuation of material by supplier - Strike / Shut down

Supply Chain Slogans

Either bring change or be beaten by competitors Cost Reduction Supplier Partnership/ Agreements process mappings & redesigning Reduce lead time Low inventory level One set of numbers Integration with IT Data Accuracy Vendor scheduling & performance CI & Excellence

Mapping Allows You to Visualize Your Supply Chain