SUPPLY CHAIN MANAGEMENT

[SCM]
 As the name indicates, supply chain management
or SCM is defined as the management or running
of supply chain.
 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.
 Thus, (SCM) is the method of coordinating and
integrating the flow of materials, information, and
finances as they move in a process from supplier
(vendor) to manufacturer to wholesaler to retailer
to consumer.
DIVISION OF SCM FLOWS:

o The product flow - includes the movement of goods from a

supplier to a customer, as well as any customer returns or
service needs.
o The information flow - involves transmitting orders and
updating the status of delivery.
o The finances flow - consists of credit terms, payment
schedules, and consignment and title ownership arrangements.
FUNCTIONS OF SCM:

1. Strategic Function
• Where-to-make and what-to-make-or-buy decisions

• Strategic network optimization, including the number, location, and size of

warehousing, distribution centers, and facilities.

2. Tactical Function
• Sourcing contracts and other purchasing decisions.

• Production decisions, including contracting, scheduling, and planning

process definition.
• Inventory decisions, including quantity, location, and quality of inventory.

• Transportation strategy, including frequency, routes, and contracting.

• Payments

• Focus on customer demand

Contd…
FUNCTIONS OF SCM:
3. Operational Function
• Daily production and distribution planning, including all nodes in the

supply chain.
• Production scheduling for each manufacturing facility in the supply chain

(minute by minute).
• Inbound operations, including transportation from suppliers and receiving

inventory.
• Production operations, including the consumption of materials and flow of

finished goods.
• Outbound operations, including all fulfillment activities, warehousing and

transportation to customers.
• Order promising, accounting for all constraints in the supply chain,

including all suppliers, manufacturing facilities, distribution centers, and

other customers.
TYPES OF SCM SOFTWARE

1. Planning applications:
It uses advanced algorithms to determine the best
way to fill an order.
2. Execution applications:
It tracks the physical status of goods, the
management of materials, and financial information
involving all parties.
Note:
[The above mentioned softwares use Web-based application service providers
(ASP) ]
Ultimate Goal of Any Effective Supply
Chain Management System

 To reduce inventory (stock) with the assumption that

products are available when needed.
After going through the above
presented slides, Can we now define
SCM in a simpler form?
Thus, SCM is defined as the "design, planning,
execution, control, and monitoring of supply chain
activities with the objective of creating net value,
building a competitive infrastructure, leveraging
worldwide logistics, synchronizing supply with
demand, and measuring performance globally."
 THANK YOU
Presented on Nov 19th , 2009 by ,

RAJSEKHAR MUKHERJEE.
IBMR.
MBA-MSU (2009-11).