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Supply chain

Supply chain is the system by which organizations source, make and deliver their products or services according to market demand

Supply chain management


It is the process of planning and controlling the efficient ,cost-effective flow and storage of raw materials, finished goods and related information from point of origin to point of consumption for the purpose of conforming to customer requirement

Goals and Purpose of SCM


Supply chain is to maximize the overall value generated Reduce uncertainty & risks, inventory, cycle time Improve business processes, customer service Increased profits & competitiveness

Why Is SCM Difficult?


Plan Source Make Deliver Buy

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 uncertainty


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SUPPLY CHAIN OBJECTIVES:

Supply chain objectives may differ from situation to situation. For functional products, cost efficiency is the critical factor. For innovative products, responsiveness is the important factor. Leanness + Agility together make up Leagility

Decision phases in supply chain


Supply chain strategy or design Supply chain planning Supply chain operation

Process view of supply chain


Cycle view
Customer order cycle Replenishment cycle Manufacturing cycle Procurement cycle

Push / pull view

Supply chain activities


Forecasting demand Selecting suppliers Ordering material Managing inventory Scheduling production Shipping and delivery Organizing information exchange

Selecting a Supplier
In selecting a supplier, a number of factors must be analyzed:
    

price quality reliability credit terms shipping costs.

Forecasting demand
Demand planning and sales forecasting is critical function for Manufacturers, distributors, retailers, & other supply chain members Effective demand planning and sales forecasting across the supply chain can bring a host of benefits in SCM It can help improve labor productivity, reduce the head count, cut inventories, speed up product flow and increase revenues and profits Forecasts can be long term , short term or aggregate Forecasts methods vary depending on type of Industry vertical Accurate forecasts is essential for FMCG type of Industry, while for other types like made to order heavy Engg Industry this is planned with simple techniques

Purchasing and procurement


Purchasing: implies the monetary transaction. Procurement: the responsibility for acquiring the goods and services the organization needs:


goods:
raw materials production parts maintenance, repair and operating supplies (MRO)

services:
consulting services utilities workers health care benefits

Production planning and control


   

Number of units of a specific product to be produced Time intervals over which production will occur Availability of equipment, materials and work force Cost effective inventory and resource management.

Material Handling
 

Moving of goods between incoming transport, storage, processes and outgoing transport The set of activities that move production inputs and other goods within plants, warehouses and transportation terminals. The task for the materials handling manager is to find the methods, the routes, the layouts and the right components to minimize handling.

Inventory management
Objectives of inventory management:


minimize costs:
working capital carrying costs scrap and rework

highest level of customer service. make decisions about:


safety stock replenishment production runs excess stock.

Inventory management tasks:




Inventory management continued..


Inventory must be managed differently for:
 

independent demand: influenced by market conditions dependent demand: derived from the production of parent items. A Independent demand
B C

Dependent demand E

Distribution
Distribution is the activity that is concerned with receiving parts or finished goods, storing them until they are required and then delivering them to the customer. Functions of distribution:
         

inventory management order processing warehousing: materials handling Transportation trucks railroads water airways pipelines

Methods of transport:

Customer service
Customer service issues include:
   

accurate understanding of customers needs and wants the ability to deliver necessary customer service levels variations between plans and their actual implementation effective communications with the customers

Key Issues in Supply Chain Mgt.


Supply Chain Integration and Strategic Partnering information sharing and operational planning are keys to successfully integrated supply chain. But what info. will be shared? How will it be used? What level of integration is needed? What partnerships can be implemented?

Key Issues in Supply Chain Mgt.


Customer Value the measure of a companys performance to its customer, based upon the entire range of products, services, and intangibles that constitute the companys offerings. Effective supply chain mgt. is critical if companys objective is to fulfill the ultimate consumer needs and provide value.

Key Issues in Supply Chain Mgt.


Information Technology and DecisionSupport Systems much of the current interest in supply chain mgt. is motivated by the opportunities that appeared due to the abundance of data and the savings that can be achieved by sophisticated analysis of these data.

Supply chain best practices


Retain only core work (products, services & solutions) Improve Supplier Selection process Reduce the number of suppliers Improve demand forecast accuracy Increase inventory turns (velocity) Decrease outsourcing costs per/unit by leveraging major suppliers for lower prices Increase standardization of products, as much as possible and appropriate Increase global sourcing, especially in geographic areas of lower labor costs Maximize economies of scale Seek global demand for products & services Increase automation and database integration between business partners using Enterprise Resource Planning (ERP) software tools and web-based trade exchanges. Use technology tools to increase speed to market, reduce costs, and obtain real-time accurate information.

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