Contents

Supply Chain Management Management of Business Logistics Demand Management & Customer Service Procurement and Supply Chain PPRA Rules Managing Inventories Warehouse Management Transportation Management Network Design & Facility Location Use of Information Technology for Managing Supply Chain SCOR Model

Learning Objectives
Familiarization with concept & Techniques of SC Strengthen knowledge of SC Knowledge that can be used in Work Environment Knowledge which provide basis for further study leading to National/ International Certifications i.e. Certified in Production & Inventory Management (CPIM) by The Association for Operations Management (APICS)

What is Supply Chain

Integration of Activities/PROCESS Starts from Suppliers.Supplier To Customers..Customer Always focus on Customer

What is Supply Chain

Its Management of network of interconnected businesses involved in supply of Product or Service. It starts from Procurement of Raw Material, Work in Progress Inventory and Transportation of Finished Goods from point of origin to point of consumption.

APICS Definition of Supply Chain

Design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally."

What is Supply Chain

An Effective SC ensures high level of Customer Service at optimum level of working capital & cost. An Efficient SC that ensures products are on the shelf, available for sale ..when shopper come to buy.

THE BASIC SUPPLY CHAIN

Manufacturing Plan & Control
BUSINESS PLAN

SALES & OPERATIONS PLAN MASTER PRODUCTION SCHEDULE (MPS)

Material Requirement Plan (MRP)

Purchase
Physical Supply Material Mgt Up-Stream Customer Inbound Logistics

Production Activity Control (PAC)

Physical Distribution Down-Stream Customer Outbound Logistics

Product Flow Cash Flow Information

Tech Terms
Business Plan: Org goals of sale, reasons to attain and plan
E.g. Unilever

Sales & Operations Plan: Individual goals/targets for individual

products/SBU. E.g. Milk, yog, butter etc.

Master Production Schedule: What we have & what we want

to do based on order/demand.

Material Requirement Plan (MRP): What ingredients

/components we require for production.

Production Activity Control (PAC): Individual production

priority/order

Supply Chain Management: Introduction

Supply chain management now part of the business vocabulary. Impact of global marketplace drastically changed the landscape of business. Change was rapid and continuous in the 1990s. Doing business in the comfort zone was no longer synonymous with success. 17

The Changing Business Landscape: Five Driving Forces

The Empowered Consumer Power Shift in the Supply Chain Deregulation Globalization Technology
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The Changing Business Landscape: Five Driving Forces

The Empowered Consumer
Impact on logistics is more direct. Informed consumers have low tolerance for poor quality in products and services. Changing demographics commands 24/7 service. Increased customer service increases the importance of logistics and supply chains.
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The Changing Business Landscape: Five Driving Forces

Power Shift in the Supply Chain
Large retailers more demanding and commanding. Focus upon distribution costs and their impact on everyday low prices. Changing logistics and supply chain strategies resulted from shifts in the balance of economic power.
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The Changing Business Landscape: Five Driving Forces

Deregulation Changing economic controls empowered creativity and competition. Changes in transportation fewer or no economic controls over rates and services. Change in financial institutions blurred traditional differences and increased competition. Change in the communications industry also resulted in more competition. Changes in the utility industry allows more competition.
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The Changing Business Landscape: Five Driving Forces

Globalization Global marketplace concept Global network sourcing, manufacturing, marketing and distribution Global alternatives have blossomed No geography --- access available to the world Supply chain challenges Wal-Marts challenges New supply sources
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The Changing Business Landscape: Five Driving Forces

Technology
Information Age provides new and unrestricted access to the place aspect of business. My time, my place Warehouse technology has changed dramatically with computer devices in use from the office space to the forklifts.
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On the Line: Extreme Enterprise

Integrating new enterprise and supply chain management solutions allowed Columbia Sportswear to keep up with sales that increased from $3 million in 1984 to $470 million in 1999. With one store and a handful of outlets, distribution to its customers is where the rubber meets the road. Columbias president was determined not to let distribution restrain growth, and backed it with money. A 1 million square foot distribution center receives more than 2 million units/month and set a record by shipping 172,000 items in one day, and more than 2 million items in a month.
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The Changing Business Landscape: The Supply Chain Concept

Development of the Concept Business Case for Supply Chain Management Characteristics of Supply Chain Management

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The Changing Business Landscape: The Supply Chain Concept

Development of the Concept Total systems cost - remains an important element of logistics analysis. Outbound logistics - was the initial focus with higher value finished goods. Inbound logistics deregulation allowed new focus on coordination of inbound and outbound movements. Value chain analysis integrated logistics activities. Terminology growing as supply chain concept matures.
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Figure 1-1 A View of Business Logistics in a Firm

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Figure 1-2 Integrated Logistics Management

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Figure 1-3 Generic Value Chain

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Figure 1-4 Logistics Supply Chain

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The Changing Business Landscape: The Supply Chain Concept

Business Case for Supply Chain Management: Why so much attention on supply chain management? ECR and Best-in-class studies (see next two slides) Complexity of the supply chain Extended enterprise concept Two-way flow of: Products Information Cash Inventory visibility
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Figure 1-5: Comparison of Average Throughput Time of Dry Grocery Chain before and after ECR Implementation

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Figure 1-6: Total Supply Chain Management Cost --- All Sectors
14 12

Revenue %

10 8 6 4 2 0 1996 1997
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Best-in-class Median

Figure 1-7: Integrated Supply Chain

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Figure 1-8: Running Lean

50 45 40 35 30 25 20 15 10 5 0

Number of times Dell and Compaq turn inventory over in each quarter, calculated at an annual rate.

Compaq Dell

1996 Qtr 4

1997 Qtr 1

1997 Qtr 2

1997 Qtr 3

1997 Qtr 4
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The Changing Business Landscape: The Supply Chain Concept

Characteristics of Supply Chain Management Inventory Visibility Pull systems Landed Cost Companies must realize that their strategies may affect the landed cost. Coordination of supply chain activities may lower the landed cost.
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The Changing Business Landscape: The Supply Chain Concept

Characteristics of Supply Chain Management
Real-time two way information flows Customer service
levels must be tailored to each customer not all customers require the same service

Supply chain relationships

Collaborative planning Share risks and rewards
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Figure 1-9: Traditional Supply Chain/Pipeline Inventory Flow 1970s and 1980s

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