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Supply-Chain
Management
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Supply-Chain Management
The objective is to build a chain of
suppliers that focuses on
maximizing value to the ultimate
customer
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Supply Chain Management
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Detergent supply chain:
Customer wants
detergent
Supermarket/
Retailer
Third
party DC
P&G or other
manufacturer
Plastic cup
Producer
Chemical
manufacturer
Packaging
Paper
Manufacturer
Timber
Industry
Chemical
manufacturer
(e.g. Oil Company)
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Flows in a Supply Chain
Customer
Material
Information
Funds
The flows resemble a chain reaction.
Supplier
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Process View of The Supply Chain
A supply chain is a sequence of processes
and flows that take place within and between
stages that ultimately fill customers' needs.
There are two different ways to view the
processes performed:
1. Cycle View
2. Push/Pull View

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Cycle View of Supply Chains
Customer
Order Cycle
Replenishment Cycle
Manufacturing Cycle
Procurement Cycle
Customer
Retailer
Distributor
Manufacturer
Supplier
Any cycle
0. Customer arrival
1. Customer triggers an order
2. Supplier fulfils the order
3. Customer receives the order
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Process View of The Supply Chain
Suppler Stage
Markets
Product
Buyer Stage
Places Order
Supplier Stage
Receives
order
Supplier Stage
Supply Order
Buyer Stage
Receive Order
Buyer Returns
Reserve
Sub processes in each Supply Chain Process.
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Customer order cycle
Customer arrival
Customer order entry
Customers order
fulfillment
Customer order receiving

Customer
Order Cycle
Replenishment Cycle
Manufacturing Cycle
Procurement Cycle
Customer
Retailer
Distributor
Manufacturer
Supplier
Suppler Stage
Markets
Product
Buyer Stage
Places Order
Supplier Stage
Receives
order
Supplier Stage
Supply Order
Buyer Stage
Receive Order
Buyer Returns
Reserve
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Replenishment cycle
Retail order trigger
Retail order entry
Retailers order fulfillment
Retail order receiving
Customer
Order Cycle
Replenishment Cycle
Manufacturing Cycle
Procurement Cycle
Customer
Retailer
Distributor
Manufacturer
Supplier
Suppler Stage
Markets
Product
Buyer Stage
Places Order
Supplier Stage
Receives
order
Supplier Stage
Supply Order
Buyer Stage
Receive Order
Buyer Returns
Reserve
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Manufacturing cycle
Order arrival from the
distributor, retailer, or
customer
Production scheduling
Manufacturing and shipping
Receiving at the distributor,
retailer, or customer
Customer
Order Cycle
Replenishment Cycle
Manufacturing Cycle
Procurement Cycle
Customer
Retailer
Distributor
Manufacturer
Supplier
Suppler Stage
Markets
Product
Buyer Stage
Places Order
Supplier Stage
Receives
order
Supplier Stage
Supply Order
Buyer Stage
Receive Order
Buyer Returns
Reserve
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Push/Pull processes can be divided on two basis.
Whether they are executed in the response to a customer
order or in anticipation of customer order.
Pull processes are initiated by a customer order,
also called as reactive processes.
Push processes are initiated in anticipation of
customer order, also called as speculative processes.
Push/Pull View of Supply
Chains
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Push/Pull View of Supply
Chains
Procurement,
Manufacturing and
Replenishment cycles
Customer Order
Cycle
Customer
Order Arrives
Push-Pull boundary

PUSH PROCESSES PULL PROCESSES
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Push/Pull View of Supply Chains
A Push/Pull view of the Supply chain is very useful when
considering Strategic Decision Relating to Supply
Chain Design.
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Supply chain objective
Main objective of SCM is to Supply Chain Profitability
while maximize overall value generated to the
customer.
Supply chain profitability the difference between
the revenue generated from the customer and the
overall cost across the supply chain.
Thus, firm has to achieve trade-off between Customer
Value and Supply Chain profitability.
It can be achieve through effective use of supply
chain drivers.
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Drivers of Supply Chain Performance
Supply Chain Drivers helps firm to achieve efficiency
and responsiveness in their supply chain.
It is Supply Chain Drivers through which the entire
activities of Supply Chain are executed.
Supply Chain Drivers can be classified in two types:
1. Logistics Supply Chain Drivers: inventory,
Transportation, Facilities.
2. Cross Functional Drivers: Information, Sourcing,
Pricing.
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Drivers of Supply Chain
Performance
Efficiency Responsiveness
Inventory Transportation Facilities
Information
Logistical
Drivers
How to achieve
Sourcing Pricing
Cross-
Functional
Drivers
Supply chain structure
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Supply Chain Drivers: Facilities
Facilities are the actual physical locations in the
supply chain network where the product is stored,
assembled, or fabricated.
Two major types of facilities: 1. Production Site.
2. storage Site.
Decision regarding the role, location, capacity and
flexibility of facility have a significant impact on Supply
Chain performance.
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Supply Chain Drivers: Inventory
Inventory in includes raw materials, work in
progress, and finished goods within supply chain.
Inventory decisions create an impact on effectiveness
and efficiency of the entire supply chain.
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Supply Chain Drivers:
Transportation
Transportation includes moving inventory from
point to point in the supply chain.
Transportation decisions create an impact on
responsiveness and efficiency of the entire supply chain.
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Supply Chain Drivers: Information
Information is the most important driver of supply
chain, as it has potential to effect other drivers of supply
chain.
It consists of data and analysis concerning facilities,
inventory, transportation, costs, prices and customers
throughout the supply chain.

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Supply Chain Drivers: Sourcing
Sourcing is the choice of who will perform a
particular supply chain activity such as production, storage,
transportation or management of information.
Strategic decision in sourcing is to decide which
function to be performed by the firm and which function to
be outsourced.
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Supply Chain Drivers: Pricing
Pricing is determining how much a firm will charge
for goods and services that it makes available in the supply
chain.
Pricing affects on behavior of buyers and impact on
profitability of supply chain.
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Considerations for Supply Chain
Drivers
Driver Efficiency Responsiveness
Inventory Cost of holding Availability
Transportation Consolidation Speed
Facilities Consolidation /
Dedicated
Proximity /
Flexibility
Information What information is best suited for each
objective
Sourcing Consolidation Flexibility
Pricing Profitability Consumer
Behaviour


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Strategic Fit : Supply-Chain
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Mission-Strategy-Tactics-Decisions
Mission, Mission statement
The reason for existence of an
organization
Strategy
A plan for achieving organizational goals
Tactics
The actions taken to accomplish
strategies
Operational decisions
Day to day decisions to support tactics
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SC: Strategic Fit
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SC: Strategic Fit
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29
Nano:Why Gujarat?
Gujarat State Government
Soft loan: Rs 9,500 crore @ 0.1% rate of interest for 20 years
Strategic location advantage Rajkot, Pipavav, Mundra
Stamp duty waiver granted
Facilities for solid-waste disposal and effluent treatment
plants to be developed by the state government
100-acre land near Ahmedabad to build the township
Uninterrupted power connection of 200-KW
14,000 cubic meter water per day
Committee headed by the Chief Secretary to monitor the
proper implementation of the project
Tata Motors
Tatas promise to invest Rs 4,000 crore in Gujarat.
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Divided components into 2 types
Proprietary designs - Designed by established suppliers like Bosch
Tata motor designs - Chose suppliers with strong process
capability that contributed with valuable suggestions to improve
on design
> 97% local sourcing, and 90% of the total car is
outsourced
Consolidated suppliers from 600 to 100 - 75% single
sourced components
Vendors were co - located with Tata in the same vendor
park
Instead of annual contracts, Tata signed long term
volume contract with vendors to reduce cost

Supply Chain Model: Vendor
development
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Supply Chain Model: Distribution
Distribution channel: Hub & Spoke
City Dealers act as hubs
Reach to semi-urban and rural areas spokes
600 retail outlets
Open Distribution Mobilize large no. of 3PL to reach
rural areas
Built long term personal relationships with vendors


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Linking SC and Business Strategy
New
Product
Development
Marketing
And
Sales
Operations Distribution Service

Finance, Accounting, Information Technology, Human Resources

Competitive (Business) Strategy
Product Development Strategy
Marketing Strategy
-
Supply Chain Strategy
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Strategies
Marketing and sales strategy relates to
positioning, pricing and promotion of
products/services

Supply chain management strategy relates to
procurement, transportation, storage and delivery
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Fitting the SC to the customer or vice
versa?
Understand the customer Wishes

Understand the Capabilities of your SC

Match the Wishes with the Capabilities

Challenge: How to meet extensive Wishes
with limited Capabilities?
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Major Obstacles to Achieving Fit
Increasing Variety of Product.
Decreasing product life cycle.
Increasing Demanding Customers
Fragmentation of chain ownership
Globalization.
Difficulty in Executing new Strategies.




Think Global and Act Local