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MODULE-1

Introduction to Supply

a n anagemenPresentation by

Dr! "ilas #! ShindePro$essor % &ead

Mechanical Engineering Department

Datta Meghe College o$ Engineering'iroli (a)i Mumbai-*++,+ .I(DI'/


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U(DE0S'(DI(2 SUPPL3 C&'I(

Changing #usiness Scenario4

The economy has rapidly increased after the World War-II and

American & European countries has enjoyed the worldmarket.

But, the economic environment and manaement theorieswere not sufficient to chane the !usiness attitude all over

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In mid of seventies there was a second industrial revolutiondue to "ean #roduction #hilosophy $"##% initiated in apan

"## model ensures the concept of total 'uality, customersatisfaction, teamwork and social interity

The situations has chaned with time and market turned intohealthy !usiness environment due to intervention of somemajor elements suested !y #orter $()*+%

Contd!!!!2


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CO(D!!!!

he $our ma5or elements suggested by Porter4

lo!al Element onsumers re'uirement, demand & /upply,

#owerful economic alliances, lo!al market pro!lems overnment Influence 0ereulation, Ta1 & 0uty structure,

Environmental protection laws

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, ,

Ta1es, !udetary pro!lems $defeat or surplus%

Technoloy Innovations #rocess innovation, Industrial

innovations, IT revolutions, Bio-technoloy and other

chanes

Contd!!!!3


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CO(D!...

he Porter has suggested $i)e process model to e6istin such en)ironment4

Threat of new entrants

3ivalry amon current players Barainin power of !uyers

Barainin power of suppliers

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he enterprises has to adopt $ollo7ing strategies toe6ist % gro74

E1pansion of Business

2erers with another enterprise

Ac'uisition of another enterprise

4ormation of strateic alliances

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Current #usiness Scenario4

Industrial revolution due to lo!ali5ation & open market

The various processes, toolin, material has acceleratedthe market rowth remarka!ly

The computeri5ation, technoloy intervention evolved toformed its own technoloy driven practices

The new conce ts and tactics from school of mana ement

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has enhanced the economic market rowth /elf-competency and formin the stron chain of

competent players provides the services to the customerseffectively, efficiently and economically

The new concepts such as merers, ac'uisitions,amalamation are helpin the enterprises for inoranicrowth

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8&' IS SUPPL3 C&'I(9

The term 6/upply hain 2anaement7 arose in the late ()*87s and came

into widespread use in ())87s. #rior to this !usiness made use of terms,

such as, 6loistic7 and 69perations manaement7.

:/upply chain interates the key !usiness processes of an orani5ationfrom end user throuh oriinal suppliers that produces products, services

and information that add value to the customer and other stake holders;.

/upply chain manaement $/2% is he oversiht of materials,

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information and finances as they move in a process from supplier tomanufacturer to wholesaler to retailer to consumer.

/upply chain manaement involves coordinatin and interatin these

flows !oth within and amon the enterprises.

/upply chain is a network of facilities and distri!ution options that

perform the functions of procurement of materials, transportation of

these materials into intermediate and finished products and the

distri!ution of these finished products to customers.

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(EED O: SUPPL3 C&'I(

The !asic purpose of supply chain is to coordinate theflow of materials, services and information amon theelements of supply chain to ma1imi5e the customer7s

valueTo satisfy the customers need with re'uired

improvement in 'uality of the products & services with

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economic pricesTo enhance the competitive advantae of the enterprises

The key function of / includes sales and order

processin, transportation and distri!ution, operations,inventory and material manaement, finance andcustomer services.

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&O8 SUPPL3 C&'I( 8O0;S9

The ultimate oal of any effective supply chain manaement

system is to reduce inventory $with the assumption that

products are availa!le as and when re'uired%.

/upply chain manaement flow can !e divided into three

main flows

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oods from supplier to customer, as well as, provide servicefrom source to the customer as per their re'uirement.

The information flow The information flow involves

transmittin orders and updatin the status of delivery. The finance flow The finance flow consists of credit terms,

payment schedules, consinment and title ownership

arranements.

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Diagrammatic Representatin ! Basic "#ements ! S$pp#% C&ainDiagrammatic Representatin ! Basic "#ements ! S$pp#% C&ainDiagrammatic Representatin ! Basic "#ements ! S$pp#% C&ainDiagrammatic Representatin ! Basic "#ements ! S$pp#% C&ain'


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/upply hain 2anaement $/2% is the manaement of all

functional activities that facilitates the manufacturinprocess to produce the product in order to satisfy thecustomer7s re'uirement at reasona!le cost.

This includes not only the o!vious functions of manain

the materials within the supply chain !ut also the flow ofinformation and money that re'uires to coordinate thesefunctional activities.

/2 can work as a loo consistin of followin s

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It starts with the customer and ends with the customer

All material, finished oods, information and all transactionsthrouh the loop flow

It re'uires lookin at a !usiness as one of the continuous,seamless process

This process a!sor!s distinct function such as forecastin,purchasin, manufacturin, distri!ution, sales and marketininto a continuous !usiness interaction

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E"OLUIO( O: SCM :U(CIO(31-01-2013VBS_SCM-I

()+8s ()=8s ()>8s ()*8s ())8s ?888s 4uture

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0urin ()+8s and ()=8s, manufacturers were employin mass

production techni'ues to reduce cost and improve productivity@ whilelittle attention was paid for creatin supplier partnerships, improvin

process desin, fle1i!ility and improvin product 'uality.

In the ()=8s and ()>8s Material re


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CO(D!!!!

The increasin popularity of the alliances !etween suppliers and

customers in the late ())8s ave a way to /2, which is continuin

today.

In the future it is e1pected that the supply chain manaement

emphasis will concentrate on supply chain e1pansion, enhancessupply chain responsiveness, increase the emphasis on :reen;

supply chain and further reducin / costs.

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process manaement.

The loistics processes were traditionally focused and attentive on

coordinatin the movement of product and information and the flow

of activities in an individual enterprise.

There have !een three major revolutions of / alon this journey

:irst 0e)olution .1=1+-1=>+/4 he :ord Supply Chain

Second 0e)olution .1=?+-1=,+/4 he oyota Supply Chain

hird 0e)olution .1==@->+++/4 he Dell Supply Chain13


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O#AECI"ES O: SCM

The o!jective of every supply chain should !e to ma1imi5e theoverall value enerated.

The value will !e stronly correlated with supply chain

profita!ility. /upply chain profita!ility or surplus is the total profit to !e

shared across all supply chain staes and intermediaries.

The o! ectives of su l chain mana ement can !e

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summari5ed to achieve the followin major oals #rovide an uninterrupted flow of materials, supplies and

services re'uired to operate the orani5ation

eep inventory investment at minimum

2aintain and improve the 'uality

Contd!!!!14


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Contd!!!!

4ind or develop the component suppliers

#urchase re'uired items and services at lowest total

cost

Improve the competitiveness of the orani5ations

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c eve armon ous an pro uc ve wor nrelationships with other functional areas within the

orani5ation

Accomplish the purchasin and marketin o!jectivesat the lowest possi!le level of administrative costs

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DECISIO( P&'SES O: SCM

/uccessful supply chain manaement re'uires

many decisions relatin to the flow of product,

information and finance These decisions fall into three cateories or

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,

decision and the time frame over which a

decision phase has an impact

Supply chain strategy or designSupply chain planning

Supply chain operation

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PILL'0S O0 COMPO(E(S O: SCM

There are four C 4ive important pillars or components of supplychain manaement system Planning

#lan /upply

#lan 0emand Balance /upply-0emand

#lan loistic networkin

Sourcing B Maing

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2anae 3e'uest

2anae /uppliers

2anae #ayment

:ul$ilment B Deli)ery 2anae Warehouse & Inventory

2anae 0istri!ution C 0elivery /chedule

0eporting B 0e)erse :lo7 3eportin of 4eed!ack

Event 2anaement

Trackin & Tracin /ystem17


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P0OCESS "IE8 O: SUPPL3 C&'I(31-01-2013VBS_SCM-I

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1'


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CP:0 CO(CEP

Collaborati)e Planning :orecasting and 0eplenishment

.CP:0/ is an concept that aims to enhance the supply chain

interation !y supportin and assistin colla!orative practices

CP:0 seeks cooperative manaement of inventory throuhvisi!ility and replenishment of products throuhout the supply

chain e1ecution

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s e s ar n o orecas an re a e n orma on amon

!usiness partners in the supply chain to ena!le automatic product

replenishment

This allows for continuous updatin of inventory and upcomin

re'uirements, makin end-to-end supply chain more efficient Efficiency can !e enhanced !y minimi5in the e1penditures for

merchandisin, inventory, loistics and transportation across all

tradin partners20


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CP:0 MODEL

Collaborative PlanningCollaborative PlanningCollaborative PlanningCollaborative Planning

Collaborative ForecastinCollaborative ForecastinCollaborative ForecastinCollaborative Forecastin

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Collaborative ReplenishmentCollaborative ReplenishmentCollaborative ReplenishmentCollaborative Replenishment

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CODP CO(CEPS

The CODP .Customer Order Decoupling Point/ is defined asthe point in value-addin material flow that separates decisionsmakin under uncertainty from decisions makin under certainty,concernin to the customer demand. Dowever, it is normally used

for production and distri!ution- related activities only. In recent years the CODPhas ained increased acceptance as an

important concept when orani5in value-addin activities inroduction and lo istics.

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CODP typoloy can !e typically adjusted and show how theenineerin resources can !e interated with the productionprocess so as to utili5ed the features of mass customi5ationenvironments into account.

It also e1amines e1istin mass customi5ation frameworks andoffers a more thorouh and nuanced typoloy for classifyinvarious levels of mass customi5ation.

4inally, the adjusted 90# typoloy is used as a foundation fordevelopin a relia!le order promise process for mass customi5es.

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SUPPL3 C&'I( D0I"E0S '(D ME0IC

There are five major drivers of supply chain manaement whichare descri!ed and shown diarammatically in fiure !elow

Production4 This is precisely related with the issues manufacturin ofproduct, such as, what to produce, how to produce and when to produce.

In)entory The decisions and issues are concerned with the 'uantity ofmaterial, such as, how much to make, how much to store as inventoryand where to store.

Location The issues reardin the location of the plant, such as, where

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, .

have a sinificant !earin on the dynamics of the supply chain and itmay affect the overall cost.

ransportation The issue may !e related to the movement of product,such as, how to move a product from one location to another and !ywhich mode of transportation. 9ne needs to evaluate economies of scale

on one hand and desired level of customer satisfaction on the other hand. In$ormation It is an !indin force havin critical implications for the

supply chain. Information plays an sinificant role for makin variousdecisions in handlin of the overall e1ecution of supply chainmanaement in the enterprises.

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Diagrammatic 0epresentation o$ Ma5or Dri)ers o$ Supply Chain

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SUPPL3 C&'I( S0'E23

The supply chain stratey will have a major impact oncreatin values for the enterprises and its / partners.

An effective / stratey may !e desined with

interated technoloy to meet the re'uirement of themarket so as to enerate the hihest level of customersatisfaction.

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The supply chain stratey is ased on followin fourstrateies

Collaboration Strategy

Demand :lo7 strategy Customer Ser)ice Strategyand

echnology Integration Strategy

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SUPPL3 C&'I( ME0ICS

It is an small set of 2etrics for users to understand

the supply chain performanceThis metrics can comprehensive enouh to capture

h l h in rf rm n h

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proress of implementation

There are two types of metrics

#ure 2etrics

0erived 2etrics

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0E:E0E(CES

Altekar 3ahul ., $?88)%, :/upply hain 2anaement;, #DI"earnin #rivate "imited, Few 0elhi, ?88)

hopra, /unil and #eter 2eindl, $?88G%, :/upply hain2anaement;, ?nd ed. Hpper /addle 3iver #earson #rentice Dall

atholic 3elief /ervices $?8((% Hnited /tates onference ofatholic Bishops, ??* West "e1inton /treet, Baltimore, 20?(?8( H/A

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o anty . . an es mu . . , upp y a n

2anaement $Theories and #ractices%;, (st edition, !y Bi5tantra

Inovation in 2anement

/hah anat, $?88)%, :/upply hain 2anaement;, #earson

Education /hinde ilas B. $?8(?%, :2erers and Ac'uisitions for alue

hain 2anaement in the 4ramework of Technoloy 0rivenIndustrial Enineerin #ractices; #h. 0. Thesis, Hniversity of2um!ai

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