Introduction

Let’s know what supply chain is:

A supply chain is a network between a company and its suppliers to produce and distribute a
specific product to the final buyer. A supply chain is an entire system of producing and
delivering a product or service, from the very beginning stage of sourcing the raw materials
to the final delivery of the product or service to end-users.
 The functions in a supply chain include product development, marketing, operations,
distribution, finance, and customer service.
 The entities in the supply chain include producers, vendors, warehouses,
transportation companies, distribution centers, and retailers.
 The supply chain segment involved with getting the finished product from the
manufacturer to the consumer is known as the distribution channel.
 Each stage of a supply chain is essentially a different industry, for example, raw
material extraction and manufacturing.
 Let’s look an example of an e-commerce company:
What are the components of Supply Chain on the basis of Gadgets and Accessories
Limited?
1. Planning: This is one of the most important stages. Before the beginning of the entire
supply chain, it is essential to finalize the strategies and put them into place. Checking
the demand for the product or service, checking the viability, costing, profit, and
manpower etc., are vital. Without a proper plan or strategy in place, it will be well-nigh
impossible for the business to achieve effective and long-term benefits. Therefore,
enough time has to be devoted to this phase.

2. Information: The world today is dominated by a continuous flow of information. In order

to be successful, it is essential that a business stays abreast with all the latest information
about the various aspects of its production. The market trends of supply and demand for a
particular product can be best understood if the information is properly and timely
disseminated through the many levels of the business.
3. Source: Suppliers play a very crucial role in supply chain management systems. Products
and services sold to the end user are created with the help of different sets of raw materials. It
is therefore necessary that suitable quality raw materials are procured at cost effective rates.
If a supplier is unable to supply on time, and within the stipulated budget, the business is
bound to suffer losses and gain a negative reputation.
4. Warehouse and Transportation: Warehousing and transportation are another two
important components of supply chain management. First, you need somewhere to store
your product, which is where the warehouse comes in and y second, you need to be able
 to transport and deliver goods from point A to point B or from your manufacturing center
or warehouse to the store and the customer.
5. Inventory: For a highly effective supply chain management system it is essential that an
inventory is kept and thoroughly maintained. An inventory means the ready list of items,
raw materials and other essentials required for the product or service. This list has to be
regularly updated to demarcate available stock and required stock. Inventory management
is critical to the function of supply chain management, because without proper inventory
management the production, as well as sale of the product, is not possible. Businesses
have now started to pay more attention to this component simply because of its impact on
the supply chain.
6. Production: Production is one among the most important aspects of this system. It is
only possible when all the other components of the supply chain are in tandem with each
other. For the process of production to start it is essential that proper planning and supply
of goods, as well as the inventory, are well maintained. The production of goods is
followed by testing, packaging and the final preparation for delivery of the finished
product.
7. Location: Any business, that wants to survive as well as flourish, needs a location which
is profitable for the business. Take for example, a carbonated drink factory is set up in an
area where water supply is scarce. Water is a basic necessity of such business. The lack of
water could hamper the production as well as affect the goodwill of the company. A
business cannot survive if it has to share an already scarce raw material with the
community. Hence, a suitable location, which is well connected, and very close to the
source of essential resources for production is vital to a business’ prosperity. The
requirement and availability of manpower must also be considered while setting up a
business unit.
8. Return: The last and final stage of supply chain management is referred as the return. In
the stage, defective or damaged goods are returned to the supplier by the customer. Here,
the companies need to deal with customer queries and respond to their complaints etc.
Why does Gadgets and Accessories Limited use supply chain component?
Supply chain management is process used by companies to ensure that their supply chain
effective and cost-effective. A supply chain is the collection of steps that the company takes
to transform raw materials into a final product.

Supply Chain Management:

Supply chain management is the management of the flow of goods and services and includes
all processes that transform raw materials into final products.

In SCM, the supply chain manager of Gadgets and Accessories Limited coordinates
the logistics of all aspects of the supply chain which consists of five parts:

 The plan or strategy

 The source (of raw materials or services)
 Manufacturing (focused on productivity and efficiency)
 Delivery and logistics
 The return system (for defective or unwanted products)
Companies with global supply chains—a category which includes a fast-growing number of
corporations, medium-sized companies, and even small businesses—can be standing on a
cost base of which 90% is attributable to supply chain expenditure.

Monthly Sales (January 2020) of Gadgets and Accessories Limited:

Product Name Monthly Sales (Tk.)
Huawei Mate 30 Pro 99,999
Vivo Y30 17,990
Samsung Galaxy A31 25,999
OPPO A12 13,990
Samsung GalaxyM21 18,999

Imported Products of Gadgets and Accessories Limited:

Mobile Companies & Brands Mobile Phone Model City Name

Samsung Galaxy A13, Galaxy A31 Gwangju, South Korea

Huawei Mate 20, Mate 30 pro Beijing, China

OPPO OPPO F9 pro, OPPO A12 Shanghai, China

Xiaomi Max, 8SE Beijing, China

Vivo Vivo X21, Vivo11 pro, Vivo Hangzhou, China

Y30
Principles of Supply Chain Management:
Principle-1: Adapt supply chain based on service needs of each customer segment.
Principle-2: Customize logistics network for each segment.
Principle-3: Align demand planning across the supply chain
Principle-4: Differentiate product closer to customers.
Principle-5: Outsource Strategically
Principle-6: Develop information technology that support multi-level decision making.
Principle-7: Adopt both service and financial metrics.
Let’s look at Toyota’s supply chain management, it saved inventory costs. Its suppliers
supplied the parts of its products at specific time points. Therefore, we can understand how
efficient Toyota’s supply chain is without any warehouse and inventory costs.

Supply Chain Optimization:

Supplier-Adapt it to your
needs and capture your
audience's attention

Factory-Adapt it to your Retailer-Adapt it to your

needs abd capture your needs and capture your
audience's attention audience's attention

Distributer-Adapt it to your Customer- Adapt it to

needsand capture your your needs and capture your
audience's attention audience's attention

 In supply chain, virtually all of the members serve as both customers as well as
suppliers.
 In the Li and Fung example, the Korean yarn producer and the Japanese zipper
producer are probably only suppliers the customer’s customers (folks like you and
me) are the only customers.
 Every other organization in the supply chain is both a customer and a supplier.
Why is SCM so important?
 To gain efficiencies from procurement, distribution and logistic
 To reduce transportation costs of inventories
 To meet the challenge of globalization and longer supply chains
 To meet the new challenges from e-commerce
 To manage the complexities of supply chains
 To manage the inventories needed across the supply chain
Objectives and goals of SCM:
 To cut costs
 Increase profits
 Improve performance in relationships with customers and suppliers
 Develop value added services that give a company a competitive edge
 Objective is to be able to have the right products in the right quantities (at the right
place) at the right moment at minimal cost
 Reduced inventory, reduced lead times, reduced warehouse cost, helps in forecast
accuracy.
Distribution Systems:
Trucking:
 Moves the vast majority of manufactured goods
 Chief advantage is flexibility
Railroads:
 Capable of carrying large loads
 Little flexibility though containers and piggy backing have helped with this
Airfreight:
 Fast and flexible for light loads
 May be expensive
Pipelines:
 Used for transporting oil, gas, other chemical products
Waterways:
 Typically used for bulky, low value cargo
 Used when shipping cost is more important than speed