supply chain management ppt prsntn-prince dudhatra-9724949948
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SUPPLY CHAINMANAGEMENT
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History of Supply Chain Management
1960s - Inventory Management Focus, Cost Control
1970s - MRP & BOM - Operations Planning
1980s - MRPII, JIT - Materials Management, Logistics
1990s - SCM - ERP - Integrated Purchasing,Financials, Manufacturing, Order Entry
2000s - Optimized Value Network with Real-Time
Decision Support; Synchronized & Collaborative
Extended Network
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What Is the Supply Chain?
Also referred to as the logistics network Suppliers, manufacturers, warehouses, distribution
centers and retail outlets facilities
and the
Raw materials
Work-in-process (WIP) inventory
Finished products
that flow between the facilities
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Suppl iers Manufacturers Warehouses &
Distribution Centers
Customers
Material Costs
TransportationCosts
TransportationCosts Transportation
CostsInventory CostsManufacturing Costs
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It is an integrated management approach for planning
and controlling the flow of material from suppliers
through the distribution channel to the end user Lisa
M. Ellram.
SCM provides companies with a boundary-spanningchannel focus where all the steps of a products
movement, regardless of corporate, political or
geographical boundaries, from raw material supply
through final delivery to ultimate user to satisfy a
particular customer group are planned and supervised
D. F. Ross.
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Definition of SCM
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The Supply Chain
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Suppliers Manufacturers Warehouses &Distribution Centers
Customers
Material Costs
TransportationCosts
TransportationCosts
Transportation
CostsInventory CostsManufacturing Costs
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The Supply Chain Another View
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Suppliers Manufacturers Warehouses &Distribution Centers
Customers
Material Costs
TransportationCosts
TransportationCosts Transportation
CostsInventory CostsManufacturing Costs
Plan Source Make Deliver Buy
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What Is Supply Chain Management (SCM)?
A set of approaches used to efficiently integrate
Suppliers
Manufacturers Warehouses
Distribution centers
So that the product is produced and distributed
In the right quantities
To the right locations And at the right time
System-wide costs are minimized and
Service level requirements are satisfied 7
Plan Source Make Deliver Buy
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Why Is SCM Difficult (NEED) ?
Uncertainty is inherent to every supply chain
Travel times
Breakdowns of machines and vehicles Weather, natural catastrophe, war
Local politics, labor conditions, border issues
The complexity of the problem to globally optimize a supply
chain is significant
Minimize internal costs
Minimize uncertainty
Deal with remaining uncertainty8
Plan Source Make Deliver Buy
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The Importance of Supply Chain Management
Shorter product life cycles of high-technology products
Less opportunity to accumulate historical data on customer
demand
Wide choice of competing products makes it difficult to predict
demand
The growth of technologies such as the Internet enable greater
collaboration between supply chain trading partners
If you dont do it, your competitor will
Major buyers such as Wal-Mart demand a level of supply chain
maturity of its suppliers
Availability of SCM technologies on the market Firms have access to multiple products (e.g., SAP, Baan, Oracle, JD
Edwards) with which to integrate internalprocesses
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Supply Chain Management Benefits
A 1997 PRTM Integrated Supply Chain Benchmarking Survey of
331 firms found significant benefits to integrating the supply
chain
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Delivery Performance 16%-28% Improvement
Inventory Reduction 25%-60% Improvement
Fulfillment Cycle Time 30%-50% Improvement
Forecast Accuracy 25%-80% Improvement
Overall Productivity 10%-16% Improvement
Lower Supply-Chain Costs 25%-50% Improvement
Fill Rates 20%-30% Improvement
Improved Capacity Realization 10%-20% Improvement
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Stages in SCM
In traditional setup, functions or departmentsorient the organization setup with very little
emphasis on business processes that cut across
the functional boundaries.
As the awareness of SCM increases,organization tends to shift to next stage towards
identification of business processes that create
value for ultimate customers and formation of
cross functional teams.
During this stage, the top management has very
little information about the total costs involved in
the entire supply chain from end-to-end. 13
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Stages in SCM (contd)
Then enterprise wide integration of information
systems that cut across the organizational
boundaries and include the channel partners
as well.
Now, the top management is fully aware of the
costs involved in the entire supply chain from
end-to-end.
The top management is also aware of the
opportunities of reducing the costs as well as
cycle time of supply chain without affecting the
performance. 14
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Key Drivers of SCM
THREE key drivers for SCM initiative i.e.MATERIAL, MONEY & INFORMATION.
Materials blocked in form of inventory can causeblockage of money. If info about such blockages orpossibility of such inventory build up is not
available, the concerned entity in the SCM may notbe in a position to initiate proactive actions toprevent such situations of excess inventories aswell as possible stock outs.
It is important that all the three key drivers are
managed through synchronization approach. For effective SCM, periodic measurement and
reporting system for Key Performance Indicators(KPI). 15
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Weaknesses in Supply Chain
Lack of trust between different business
entities in the supply chain resulting inobliteration of free exchange of information.
High inventory levels at different stages of thesupply chain.
High occurrence of stock out situationsresulting in loss of production and delay indeliveries causing cascading effect in terms ofdelays down the supply chain.
High cost of operations due to inefficientprocurement and rush purchases.
Loss of business as customers move tocompetitors due to non-availability of goodswhen customers need them.
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SCM related Concepts
VMI Vendor Management Inventory. Herevendor monitors the inventory of specific items atmanufacture location and also reacts to theexpected off take and arranges to replenish thestocks.
3PL Third Party Logistics. Third party i.e. otherthan supplier or customer plays a role ofhandling the logistics activities.
4PL Fourth Party Logistics. It extends theapproach of third party logistics to include afourth party that is brought in to manage theplanning and management functions that areprovided by the third party. 17
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SCM related Concepts (contd)
e-Procurement ElectronicProcurement. Itmakes use of Internet based solutionsincluding concepts like reverse auctions,posting of requirements at specializedelectronic marketplaces.
CPFR Collaborative PlanningForecasting &Replenishment. It involves collaborative effortsby various entities in the supply chain in order
to bring about effective and efficient forecastingof demand and activities associated withfulfilling the demand through replenishmentbased shipments.
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