Supply Chain Management

Introduction
• What is Supply Chain?
• What is it composed of?
• How does it Function?
• What is it’s purpose?
• What are the types prevalent?
• What is it’s significance?
 Supply Chain
A supply chain consists of all parties involved, directly or
indirectly, in fulfilling a customer request. The supply chain
not only includes the manufacturer and suppliers, but also
transporters, warehouses, retailers and customers
themselves. Within each organization, such as a
manufacturer, the supply chain includes all functions involved
in receiving and fulfilling a customer request. These functions
include but are not limited to new product development,
marketing, operations, distribution, finance and customer
service.
 Supply Chain Management
The management of supply chains has been an intriguing yet complex
endeavor for nearly every organization that has come into existence with
heavy research conducted at varying stages to facilitate in the adaptation
of new processes in order to maximize effectiveness and efficiency.

“Integrated Supply Chain Management (ISCM) is a process oriented, integrated

approach to procuring, producing and delivering products and services to
customers. ISCM has a broad scope that includes sub suppliers, internal
operations, trade customers, retail customers and end users. It covers the
management of materials, information and funds flow.”

“A supply chain is a network of facilities and distribution options that performs the
functions of procurement of materials transformation of these materials into
intermediate and finished products, and the distribution of these finished products
to customers.”
 Supply Chain Management

“The integration of business processes from end user through original suppliers,
that provide products, services and information that add value for customers”

“SCM aims to increase sales, reduce costs, and make full use of assets by
streamlining the interaction and communication of all participants along the supply
chain. SCM solutions use networking technology to link suppliers distributions, and
business partners to better satisfy the end customer, while feeding real time data
about customer demand into the partners’ production and distribution”
 Types of Supply Chains
1. Raw Supply Chains
2. Ripe Supply Chains
3. Internal Supply Chains
4. Extended Supply Chains
5. Self-Monitored Supply Chains
6. Outsourced Supply Chains
7. Production-Oriented Supply Chains
8. Financial-Oriented Supply Chains
9. Market-Oriented Supply Chains
10. Value Chains (Complete Supply Chains)
 Objective of a Supply Chain
• To reduce the physical supply links,
• To define supply chain responsibilities to a
specific core service competency,
• To decrease the time and cost of getting end
user customer products in volume to markets
worldwide.
 Organization
President &
CEO

Vice President Vice President

Vice President
Sales & Supply Chain
Finance
Marketing

General General General

Manager- Manager- Manager-
Materials Logistics Manufacturing
 Web – Centric Supply Chain
Web-centric supply chains are the most
prominent and effective combinations of
internet functions and supply chain operations
in the latest generation.
• E-Business
• E-Commerce
• E-Collaboration
• E-Procurement
 Web-Centric Supply Chains
An enterprise resource planner (ERP) serves as the central
hub for supply chains functioning with a Web-Centric
structure. The hub exists in the form of a website or server
and is available to all supply chain members through the
internet.
E-business applications effectively provide an information
system the links multiple departments/companies together
enabling companies to tackle complex/difficult tasks. ERPs,
currently, are designed to meet the requirements of supply
chains with respect to their dynamics and facilitate as the
nerve center for organizations- the repository for
storing/tracking internal information about inventory levels,
pricing structures and other key supply chain functions.
 Web-Centric Supply Chains
• E-Commerce: All electronic transactions carried out among
supply chain partners (including customers) are carried out
through e-commerce.
• E-Procurement: All steps of a complex procurement process
are simplified through e-procurement in which process
relevant software solutions are implemented to facilitate
dynamic order management in a diverse range of companies.
• E-Collaboration: Cost effective information sharing
solutions/software/networks are implemented in companies
to facilitate complex collaboration among
departments/companies/suppliers/customers.
 Theory of Firm
Firms exist with the objective of carrying out specialized production or
delivery of services which are problematic for households to
produce/deliver independently. In the process of carrying out such
functions they achieve a level of efficiency and effectiveness in terms of
time, cost and quality making these firms ideal providers of goods and
services. In the production/delivery of goods/services firms generate
revenue to recover costs incurred in the production/delivery processes.
Thus, firms exist to create wealth of profits.

“Firms exist because there are costs to using the market”

“A firm is any individual, or group of individuals, that undertakes

specialized production, that is, producing for others rather than for their
own households. Firms exist because they are able to produce goods more
efficiently than households can. The alternative to the firm is not the market
but the household. If firms are less productive towards households, people
will become self-sufficient and produce goods for their own consumption”
Theory of Firm (two forces)
 The Right Approach

• Right Product
• Right Time
• Right Quality
• Right Quantity
• Right Place
 Firm and Market Share
In the current market dynamics firms need to be aware, equipped and
circulated with the latest information to stay updated with prevalent
market conditions including competition status, position of customers and
climatic dynamics of the market. Therefore, the 3C’s of the market are:

Customer Competitor

Climate
 Firm and Market Share

The Customer: The Competitor:

• Price • Service Component
• Product • Product Bundling
• Place
• Product Changes

The Climate:
• Deregulated industries
• Liberalized Trade
• Opening up the economy to foreign investment
• Reforms in the financial sector
 Just-In-Time Production
JIT focuses on rapid stock recovery during the manufacturing
process. It is a key component in the prevalent automotive
industries. Stock utilized in production is immediately
recovered through an integrated stock management system
linking all tiers in the production process. Smooth flow of
information is critical and serves as the key aspect in the
process. The main objective of JIT is to achieve lean
production or stock less production. The effective application
of JIT leads to profit maximization and return on investment
through reduced inventory levels, improved product quality,
reduced production and lead times as well as other costs.
 Just-In-Time Production (Successful
implementation)
• Stabilize and level the MPS with uniform plant loading
• Reduce or eliminate set-up times
• Reduce lot sizes (manufacturing and purchase)
• Reduce lead times (production and delivery)
• Preventive Maintenance
• Flexible Work force
• Require supplier quality assurance and implement a zero
defect quality program
• Small-lot (single unit) conveyance
 Value Chain Management
Value chains extend beyond supply chains and include components
not commonly found in a regular supply chain. The objective of
creating a value chain is to include all essential elements involved in
creating value within a business unit. At each step of the value
chain value is added to the product or service being
manufactured/delivered.
Managing a value chain requires the development and sustenance
of close relationships with suppliers and customers.
Value chain analysis looks at every step from raw materials to the
eventual end user-right down to disposing of the packaging after
use. The goal is to deliver maximum value to the end user at the
least possible total cost.
 Reference Books
• Book 1: Supply Chain management by Sarika
Kulkarni & Ashok Sharma
• Book 2: Supply Chain Management, 2nd Edby
Sunil Chopra and Peter Meindi.