SUPPLY CHAIN MANAGEMENT

• Supply chain management is the management of all the activities related to sourcing, procurement, conversion and logistic management to deliver the right product or services to the customers at right time at acceptable cost

• Organization in supply chain includes suppliers , intermediaries, transportation and logistics providers

Supply chain drivers

• A number of forces or Drivers have played the a role in the evolution of the supply chain management strategies few of them are given below

1- Technology - two technological developments that have influenced the structure and operations are Information & communication technology

Competitive factors

• The major competitive factors for supply chain relate to cost and availability factors

• Organizations that focus on managing the inventories end up with reduced inventory related cost and improved stock out performance due to faster market access and improved process improvements

Business & Social Environment

• Competition is severe. It has been recognisedThat instead of competition between

organisation .competition is between supply chains now supply chains are more receptive to collaboration

Policy and regulation

• Many policy and regulatory acts have a directEffect on supply chain initiative e,g phasing outOf central tax replacing it with value added TaxWill have impact on distribution & retailing

strategies of Companies including warehousing locations

Move from Producer centric to customer centric

• Earliest supply chain were trading supply chain .It involved producing goods in one location and moving to another location where they were sold or exchanged

• Customer centric area is an era of global competition. Tools & Techniques used in customer- centric are totally different from

that are used in producer centric supply chain

Supplier Manufacturer DistributorDistributor Retailer Customer

Supply Chain Stages

Value Chain in a Company

New product development

Marketing & Sales Operation

Distribution Service

Finance, Accounting , Information , Human Resource , Technology

Supply chain effectiveness

• Supply chain effectiveness depends upon• Short Lead Time• Ability to handle large variety of products• Ability to meet high service level• Handle supply uncertainty• To respond to wide range of quantities

demanded

continued

• Responsiveness comes at a cost which can be understood by the below mentioned graph

High Low

High

Responsiveness

Cost

low

collaborationstrategy

Demand flow

strategy

Customer service

strategy

Technologyintegratio

nstrategy

Supply chainStrategy framework

Competitive Strategy

ProductDevelopmen

t strategy

Supply chain strategy

Marketing& sales strategy

Competitive strategy

Supply chain strategy

Effieciency Responsiveness

Facilities Inventory Transportation Information

Facilities

• Facilities in supply chain stands for the locations to or from which the inventory is transported. Facilities and their corresponding capacities to perform their functions are key driver Centralization increases the efficiency. Locating the facilities near the customer may increase number of facilities hence responsiveness can be increased

Components of facilities Decision

Following are the components of facilities Decision

1-Location2-Capacity3- Operation methodologya)Product wiseb)Function wise

Logistical Infrastructure in India

• India has vast network of Roads ,Railway lines, Air cargo shipment system and vast coastal

lineRoad—1- National Highways-65569 KM 2-State Highways- 1,31,899 KM3- District level roads- 467763KM 4-Village& other roads- 2650000 KM

Important highlights

In India we are able to cover 300km on per day basis in west & Europe it is 600km/day

Government has taken initiative to establish N .H.A .I

Golden Quadrilateral has initiated and it is in advance stage- 5846 km

NS-EW (North south &East west corridor is also on the anvil – 7300 km

Existing Drawbacks- Slow speed Traffic &congestion

Rail Network – Biggest in Asia68% of revenue of railways comes from Freight,

89% of freight is made of transporting Coal , Cement , Fertilizer , petroleum products , Food Grains ,Iron ore

Finished steels and Raw Materials for steel plants

SEA PORT NETWORK

India has a costal line 7517 KMSIndia has 12 major ports95% of trade is by volume and 75% by value

Government has taken initiative to allow 100% FDIGovernment has setup National Maritime Development Plan

Out Sourcing

• Manufacturing Industries are normally faced with situation where they have to decide to make the parts in-house i,e by themself or it be given to some other manufacturer to make it. Such course of action is termed as Outsourcing.

• Outsourcing decision is taken on two importantParameters 1) cost saving

2) capacity constraintIn the context of supply chain Management ,in boundLogistic can be out sourced another party to carryout

the related job

Third Party logistics

• A manufacturing Firm may take a decision to purchase trucks for ensuring the dispatch of goods/final product to customer . How ever when business volume increases ,company may have to purchase more no of trucks. At one point of time company may decide to engage out side parties i,e

logistic companies who have variety of trucks & tempos, Go down & Warehouse at their disposal

Logistics

• This term was used in Military for deployment of armaments and troops. However it is widely used for movements of Raw material semi-finished and final

products from manufacturer to warehouse or distributor and finally to customer.

Logistic is broadly classified as Inbound logistic & outward logistic.

Inbound implies that suppliers are arranging the dispatch of raw materials from their end to manufacturer

Logistics-cntd

• In our country many traders & manufacturer patronized Railway goods train as well the parcel van of passenger trains to move their

products after packing them in gunny bags & wooden boxes and crates. However

parties/users have to go to railway’s goods shed/parcel room to get the cargo release and bring it their premises. It was cumbersome

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• Transportation of products manufactured by industries was also managed by using Trucks

and tempos depending upon Tonnage &, dimensions as well distance to be travelled.

we see many trucks carrying goods and travelling more than 2000 KM also.

we can also observe that construction of truckBodies are also modified to suit the requirment

Logistic-continued

• Some big business organization like T.C.I, ABC road lines, South Eastern road line have owned large no trucks or took trucks on hire basis from individuals.

• Logistic companies have following facilities at their disposal

1 Fleet of Truck, Trailer and LCVs

continued

2- Godowns 3- Material handling equipments like pallet-

lifters, fork lifts, Scissor lifts etc4- Racks & Pallets for storage of goods5- requisite manpower to perform following

functions – a) Receiving /collection of goods and issue

necessary receipt normally called GRN

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• 2- after receiving the good it is to be stored in safe location having location number so that

one can retrieve the consignment when ever it is to be dispatched .

3- Load planning and routing another important function is to asses the load whether load has

become full load meaning thereby full truck load for that destination otherwise routing has to be worked out

Operational objectives

• Logistic Management has following major objectives

• 1- To deliver the consignment in committed time

• 2- to deliver the consignment in safe condition i,e without any damage

• 3- total cost of delivering the product should be to the satisfaction of customer

Continued

• There should not be any shortage or pilferage in the consignment

• Communication with respect to delivery date and time to be sent to consignee for his/her availability to receive the consignment