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SEM-4 > OP > Supply Chain Management 1

SEM-4 > OP > Supply Chain Management 1

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Vineet Gupta
Reg. No: 200307579
Supply Chain Management
Q. No.1) What do you mean by SCM? Explain with suitable examples.

ANS: A Supply chain management is a network of facilities and distribution options that performs the function of procurement of materials, transformation of these materials into intermediate and finished product and distribution of these products to the final customer. Supply chain exists in both the service and manufacturing organizations. The complexity of SCM varies from firm to firm and industry to industry.

In traditional business marketing, distribution, planning, manufacturing and purchase were organized and operated independently. The interests of these organizations were conflicting. For example the goals of manufacturing operations were to maximize production with little consideration to maintain inventory level and to minimize inventory cost. Marketing department, to increase its customer base gives unreasonable delivery commitment to the customer conflicting with the production plan.

In this way there was no single was no single plan for the business. To increase the effectiveness clearly there was a need of a plan through which different functions can be integrated. Supply chain management is a strategy through which such an integration can be achieved.

The figure above shows the example of supply chain. Materials flow downstream from aw material sources through a manufacturing level transforming the raw materials to intermediate. These are assembled at the next level to form the finished product. The products are shipped to the distribution centers and from there on to retailers and to the customers.

The objectives of supply chain management are following
1) Increase communication along all nodes of the supply chain to create
uninterrupted flow of materials.
2) Decrease the inventory while maintaining the high customer satisfaction level.
3) Reduce the supplier base and develop the supplier relationship in order to
reduce overall costs.
4) Standardize parts as much as possible to reduce the inventory level of parts.
Examples of the supply chain

1) In the Auto industries the components are manufactured at the production centers as per the plan of the Production planning and control department. The parts are assembled into finished product and sent to the distribution centers. Distribution centers are connected electronically with the sales and marketing

Page 1 of 17
Vineet Gupta
Reg. No: 200307579
Supply Chain Management
department which can cater to the varying demands of the customers at these

2) In the service organization the customer complaints is recorded and on passed to the service engineer who immediately talks with the customer and diagnosis the fault. Store issues necessary parts and engineer visits the customer and rectify the fault give feedback to the service center for the necessary records.

Q.No.2) Explain the logistic management in detail and elaborate the difference
between logistic and SCM.

ANS) Logistic management can be defined as, design and operation of the physical, managerial and informational system needed to allow goods to overcome time and space from the producer to the customer.

According to Kotlar four important Cs are convenience, communication, customer value and cost to the customer. The first two Cs are referred as logistic where the customer has the right product at the right time and in right place.

Within the supply chain logistics is considered as the link between production, purchasing and marketing. Controlling this link is a measure concern for the management. Any of the above parameters are susceptible to fluctuation and logistic is the way to study and controlling these fluctuations.

Productivity and performance in logistic:
It can be measured as the ratio of output to a single input such as labor, materials or

Value added productivity means sales minus bought in goods, materials or services
Total productivity means ratio of total output to total input.

A frame work for productivity and performance analysis for logistics management is
shown as below
The ultimate result of logistic process is the outcome indicating the improved quality
of life. Productivity is also a combination of effectiveness and efficiency and
Page 2 of 17
Logistics process
or throughput
Vineet Gupta
Reg. No: 200307579
Supply Chain Management
described as the value of performance achieved in relation to the cost of resources
Productivity and performance measures need to reflect the objective and goals of
logistics management
Major long term goals can be following
a) Total productivity
b) Quality of operation
c) Flexibility
d) Speed of operation
e) Capacity utilization
Main processes of logistics are the following parameters
a) Procurement
b) Packaging
c) Handling
d) Sorting
e) Transport
f) Information system
Logistic at the strategic level.
Four key factors of the logistic strategic environment are.
a) Competition
b) Market served
c) Technology
d) Stakeholders
Once these are analyzed relevant performance measures can then be developed to
monitor the long term success of the chosen strategy. These are demonstrated below.
Market served
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