Charles Darvin said-

It is not the strongest,

who would survive

– over a period of time,

but

– the flexible and fittest.

Transition phases

of

Manufacturing Sector

Evolution of Supply Chain Concept

Transition phases of Manufacturing Sector

• Craft Production

• Mass Production

• Lean Production

• Customized Production

MARKET ENTRY

PARAMETERS

MARKET LEADERSHIPPARAMETERS

CAPACITYTO

PRODUCE

HIGH CAPACITY

TO PRODUCE

(HC)

Up to 1920

HC

HC+

COSTCOMPETANCY

(CC)

1920 - 40

HC +

CC

HCCC+

Quality

1940 - 80

TQM Drive

HCCC

TQM

HCCC

TQM+

DELIVERY

1980 - 90

ERP

HCCC

TQMDelivery

HCCC

TQMDeliveryVALUE

1990 Onwards

CRM

VALUE MATRIX

Competition & Customer Retention

“ In today’s competitive environment

(wherein

there are many suppliers,

all giving equal offerings & quality)

the customer has a choice to switch over.

Q - How would you retain your customer ?

( Remember – Real Profit comes only from Repeat Sale. )

‘ Customer Value ’ Concept

Capability required for

Market Entrance and Market Leadership

has changed from

“Ability to Supply”

to

“Ability to Add More & More Value” to customer

Value Addition activities come by -

• Adding benefits / uses

• Reducing cost

• Defect-free Quality

• Right Time Delivery

Q – Can SCM help in “ Value Creation Activities”?

Quality Quality ServiceService

ValueValue == ---------- X ------------------- X --------- CostCost Time Time

Design Procure FabricateSub-assemble

Final assemble

TestStock as Inventory

Pack & Ship

What is Supply Chain ?

Is it possible to manage this supply chain ?

Manufacturing Environments

• Make to Stock ( MTS )

• Assemble to Stock ( ATS )

• Make to Order ( MTO )

• Engineered to Order ( ETO )

Design Procure FabricateSub-assemble

Final assemble

TestStock as Inventory

Pack & Ship

Customer Order

L.T.

Make to Stock ( MTS ) Environment

Customer doesn’t have to waitHe has a choice to select/ reject

FG manufactured before Customer OrderHence “ Pushing the Sale “ philosophy

Design (Modular Product)

Procure FabricateSub-assemble

Stock Standard Modules as Inventory

Final assemble The Customer Selected Modules

TestPack & Ship

Customer Order (CODP)

L. T.

Assemble to Stock ( ATS ) Environment

Key components are planned & stocked in anticipation of Customer OrderCODP ignites the assembly of Customized Product

Design

Stock component Design & Standards Parts

(Customer design, if required) Procedure (Components & RM)

FabricateSub-assemble

Final assemble

TestPack & Ship

Customer Order (CODP)

L. T.

Make to Order ( MTO ) Environment

Goods & Services to be manufactured after receipt of customer orderAdv. – Customer gets more options , Manufacturer curtails inventory

Design

(Unique Engg. Design or significant customization)

Procure (RM, Standard components etc.)

FabricateSub-assemble

Final assemble

TestPack & Ship

Customer Order (CODP)

L. T.

Engineered to Order (ETO) Environment

Highly customer focused environment requiring Unique Design, Significant Customization

Distributors/ Dealers Small to

Midsize Companies

Large Companies

Consumer

Flows in a Supply ChainFlows in a Supply Chain

Materials & credit

Orders & cash

1st Tier Supplier

Anchors

2nd Tier Supplier

2nd Tier Supplier

2nd Tier Supplier

Supply Chain ( Martin Christopher)

The supply chain is the network of organizations that are involved, through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hands of the ultimate consumer.

Supply chain management is not the same as ‘vertical integration (normally implies ownership of upstream suppliers and downstream customers).

Vertical Integration was once thought to be a desirable strategy but increasingly organizations are now focusing on their ‘core-business’ – in other words the things they do really well and where they have a differential advantage. Everything else is ‘out-sourced’ – in other words it is procured outside the firm.

SCM & Vertical Integration

How the focus on Production Methodology got shifted

Tiered Production

LevelsLevels

TimePRESENT FUTURE

Size

Size Network

Tall and Broad based structure with many levels

Small and flat structure with few levels

Functional Organization with coordinators process

Network based structure