SUPPLY CHAIN MANAGEMENT LECTURE NO: 2 DATE: 08/11/23SUPPLY CHAIN MANAGEMENT Ercrorscens Asset of approaches Supply Chain Management used to efficiently integrate suppliers, manufacturers, warehouses, and stores + Meaning of SCM sothat merchandise is produced and distributed at the right quantities, to the right locations, and at the right time in order to minimize systemwide costs while satisfying service-level requirements.Supply Chain Management + Meaning of SCM. * Objectives of SCM SUPPLY CHAIN MANAGEMENT Points to Note — 1) SCM takes into consideration every facility - from supplier and manufacturing facilities through warehouses and distribution centers to retailers and stores, that has an impact on cost and plays@ role in making the product conform to customer requirements. 2) The objective of supply chain managementis to be efficient and cost- effective across the entire system; total systemwide costs, from transportation and distribution to inventories of raw materials, work in process, and finished goods, are to be minimized. Thus the emphasis is not on simply minimizing transportation cost or reducing inventories but rather on taking a systems approach to supply chain management. 3) As supply chain management revolves around efficient integration of suppliers, manufacturers, warehouses, and stores, it encompasses the firm’s activities at many levels, from the strategic level through the tactical to the. operational level,‘Supply Chain Management * Meaning of SCM * Objectives of SCM * Stages of SCM 1) 2) 3) 4) 5) SUPPLY CHAIN CONCEPTS Stage - 1: Planning Stage - 2: Sourcing Stage - 3: Manufacturing Stage - 4: Delivering Stage - 5: Returning‘Supply Chain Management * Meaning of SCM * Objectives of SCM * Stages of SCM 1) 2) 3) 4) 5) SUPPLY CHAIN CONCEPTS Stage—1: Planning Stage - 2: Sourcing Stage - 3: Manufacturing Stage - 4: Delivering Stage - 5: Returning + Businesses start the process to develop products that will satisfy customers' wants and expectations. + Businesses understand the type of raw material needed, calculate the number of resources required, and estimate the cost of production. + Businesses conduct market research, test their products, manufacture prototypes, make adjustments, and inform distributors, wholesalers, and retailers about the new items or services. + Businesses also use this stage to identify the best locations and providers from which they can obtain raw materials.‘Supply Chain Management * Meaning of SCM * Objectives of SCM * Stages of SCM 1) 2) 3) 4) 5) SUPPLY CHAIN CONCEPTS Stage - 1: Planning Stage -2: Sourcing Stage - 3: Manufacturing Stage - 4: Delivering Stage - 5: Returning * Businesses starts extracting, collecting, refining, processing, transporting, and storing raw materials. * Businesses source raw materials from more than one country, province or territory. * Businesses source of primary materials may vary depending on prices, availability, quality, and transportation fees. * Businesses also need to have proper equipment and trained personnel to handle the materials, the capacity to store the materials, and an action plan to advance to the next stage.‘Supply Chain Management * Meaning of SCM * Objectives of SCM * Stages of SCM 1) 2) 3) 4) 5) SUPPLY CHAIN CONCEPTS Stage - 1: Planning Stage - 2: Sourcing Stage — 3: Manufacturing Stage - 4: Delivering Stage - 5: Returning * Businesses after receiving the raw materials, start processing the resources to generate a new product. + Businesses develop a process to oversee and ensure that all standards and quality control procedures the manufacturing phase. * Business manufacturing process also responds to the market demand for the product, the orders placed by distributors, wholesalers, and retailers, and the manufacturer's capacity. + Capacity of the business manufacturing process depends on its facilities, its size, the number of employees and the technology used.SUPPLY CHAIN CONCEPTS Supply Chain Management 1) Stage- 1: Planning 2) Stage-2: Sourcing 3) Stage ~ 3: Manufacturing * Objectives of SCM 4) Stage -4: Delivering * Stages of SCM 5) Stage — 5: Returning * Meaning of SCM * During the delivery stage, retailers, wholesalers, and final customers receive the product. + Delivery phase makes use of transportation enterprises, such as trucking companies, railways and air freight carriers. * To make sure that the product reaches its final destination in the same condition as it was manufactured, usually a series of procedures and protocols are followed by distributors, wholesalers and retailers.‘Supply Chain Management * Meaning of SCM * Objectives of SCM * Stages of SCM 1) 2) 3) 4) 5) SUPPLY CHAIN CONCEPTS Stage - 1: Planning Stage - 2: Sourcing Stage - 3: Manufacturing Stage - 4: Delivering Stage — 5: Returning This stage is associated with returns of defective products and ‘end of life’ products. This stage includes identifying the product condition, authorizing returns, scheduling product shipments, replacing defective products and providing refunds.Supply Chain Management + Meaning of SCM. * Objectives of SCM + Stages of SCM + Key Issues of SCM SUPPLY CHAIN CONCEPTS 1) Fast changing markets Why it is so? + Technology and globalization affects the factors that affect consumer behavior. + Influence of social media . Challenges - + Products have shorter life cycles due to rapidly changing market demands. + Businesses need to constantly update product features. + Businesses are under pressure to introducing new products, while keeping costs low. Solution — + Keep a flexible supply chain model.Supply Chain Management + Meaning of SCM. * Objectives of SCM + Stages of SCM + Key Issues of SCM SUPPLY CHAIN CONCEPTS 1) Fast changing markets 2) Globalization. How it is a challenge to SCM? + Business are moving manufacturing operations to countries which offer lower labor costs, lower taxes, and/or lower costs of transport for raw materials. + Business are procuring resources or raw materials from different countries. * Controlling and maintaining delivery schedule becomes complex. * Inflation ata global scale. Solution — + Creating a unified unit of suppliers and educating them about the global risk and challenges.Supply Chain Management + Meaning of SCM. * Objectives of SCM + Stages of SCM + Key Issues of SCM SUPPLY CHAIN CONCEPTS 1) Fast changing markets 2) Globalization. 3) Quality and Compliance. How it isa challenge to SCM? + Due to Globalization, Internet, influence of social media consumer are now more aware of their expectations of product. + Measurement and compliance has also become essential due to strict, government norms and regulations. Solution + Implementing a robust quality control measures at different stages of the supply chain. + Clear communication of the accepted quality standards and compliance requirements. + Deciding the performance indicators to measure quality performance across the supply chain.Supply Chain Management Meaning of SCM Objectives of SCM Stages of SCM Key Issues of SCM Supply Chain Drivers and Obstacles SUPPLY CHAIN CONCEPTS The term ‘driver’ refers to the key factors that impact the structure, strategies, practices, and the design of the supply chain. Businessés develop and manage these drivers to emphasize the ideal balance between - 1) Responsiveness to customer demands and expectations and 2) The push for efficiencySUPPLY CHAIN CONCEPTS Supply Chain Management The term ‘driver’ refers to the key factors that impact the structure, strategies, practices, + Meaning of SCM and the design of the supply chain. + Objectives of SCM Businesses develop and manage these drivers to emphasize the ideal balance between - 4) Responsiveness to customer demands and expectationsand * Stages of SCM 2) The push for efficiency + Key Issues of SCM Production — Supply Chain Drivers and To achieve a responsive supply chain by decreasing delivery time. Obstacles 1) Business can have excess capacity and flexible manufacturing techniques to produce a wide range of items. 2) Business can have multiple, smaller production facilities close to distribution centers and customer hubs. To push for efficiency 1) Business can have production facilities with little excess capacity and produce a limited range of items. 2) Centralizing production in large central plants for better economies of scale.Supply Chain Management Meaning of SCM Objectives of SCM Stages of SCM Key Issues of SCM Supply Chain Drivers and Obstacles SUPPLY CHAIN CONCEPTS The term ‘driver’ refers to the key factors that impact the structure, strategies, practices, and the design of the supply chain. Businesses develop and manage these drivers to emphasize the ideal balance between - 41) Responsiveness to customer demands and expectations and 2) The push for efficiency Inventory — To achieve a responsive supply chain by decreasing delivery time. 1) Business can have excess inventory at more warehouse locations. To push for efficiency 1) Reducing inventory levels of all items, especially those that do not sell frequently. 2) Stocking inventory in only a few central distribution centers achieves economies of scale and cost savings.SUPPLY CHAIN CONCEPTS Supply Chain Management The term ‘driver’ refers to the key factors that impact the structure, strategies, practices, + Meaning of SCM and the design of the supply chain. + Objectives of SCM Businesses develop and manage these drivers to emphasize the ideal balance between - 4) Responsiveness to customer demands and expectationsand + Stages of SCM 2) The push for efficiency + Key Issues of SCM ;, ¥ Location — Supply Chain Drivers and — To achieve a responsive supply chain by decreasing delivery time. Obstacles 1) Business can establish many locations near customer groups. . To push for efficiency 1) Business can operate from few select locations and centralizing activitiesSupply Chain Management Meaning of SCM Objectives of SCM Stages of SCM Key Issues of SCM Supply Chain Drivers and Obstacles SUPPLY CHAIN CONCEPTS The term ‘driver’ refers to the key factors that impact the structure, strategies, practices, and the design of the supply chain. Businesses develop and manage these drivers to emphasize the ideal balance between - 4) Responsiveness to customer demands and expectationsand 2) The push for efficiency Transportation — To achieve a responsive supply chain by decreasing delivery time. 1) Business can have faster modes of transportation, such as air freight-while often more expensive-allow for shorter delivery times and greater response flexibility. . To push for efficiency 1) Business can achieve efficiency in transportation by moving products in larger batches and by bulk carriers such as ships or railroads. 2) Transporting products from one centralized distribution center instead of multiple separate locations.SUPPLY CHAIN CONCEPTS Supply Chain Management The term ‘driver’ refers to the key factors that impact the structure, strategies, practices, + Meaning of SCM and the design of the supply chain. + Objectives of SCM Businesses develop and manage these drivers to emphasize the ideal balance between - 4) Responsiveness to customer demands and expectationsand + Stages of SCM 2) The push for efficiency + Key Issues of SCM . Y Information — Supply Chain Drivers and — To achieve a responsive supply chain by decreasing delivery time. Obstacles 1) Business can achieve high level of responsiveness when it is able to collect and share accurate and timely information among the other four drivers. To push for efficiency 1) Business can achieve efficiency by increasing the availability, accuracy, and utilization of information.Supply Chain Management Meaning of SCM Objectives of SCM Stages of SCM Key Issues of SCM Supply Chain Drivers and Obstacles SUPPLY CHAIN CONCEPTS The obstacles of supply chain management include: * Lack of top management support + Non-aligned strategic and operating philosophies + Inability or unwillingness to share information + Lack of trust among supply chain members + Unwillingness to share risks and rewards + Inflexible organizational systems and processes + Cross-functional conflicts + Inconsistent or inadequate performance measures. + Resistance to change + Lack of training for new mindsets and skillsUNIT-2 LOGISTICS Evolution, Objectives, Components and Functions of Logisties Management, Distribution related Issues and Challenges; Gaining competitive advantage through Logistics Management, ‘Transportation- Functions, Costs, and Mode: Network and Decision, Containerization, Cross docking.LOGISTICS * Meaning of Logistics According to the Council of Logistics Management Logistics is that part of the supply chain process that plans, implements and controls the efficient, effective flow and storage of goods, services and related information from the point of origin to the point of consumption in order to meet customers requirements.LOGISTICS + Meaning of Logistics Forms of logistics activities include — Demand forecasting Waste ‘management Inventory planning and control+ Meaning of Logistics LOGISTICS Forms of logistics activities include — * Transportation + Storage + Packaging + Materials handling * Information maintenance + Purchasing+ Meaning of Logistics LOGISTICS Forms of logistics activities include — * Transportation + Storage + Packaging + Materials handling * Information maintenance + Purchasing + Physical movement or flow of goods + Selection of mode of transport + Vehicle scheduling+ Meaning of Logistics LOGISTICS Forms of logistics activities include — * Transportation * Storage + Packaging + Materials handling * Information maintenance + Purchasing + Inventory management and warehousing. + The arrangement of inventory or stock within a warehouse. + The process of allocating, managing, and optimizing physical space within warehouses.+ Meaning of Logistics LOGISTICS Forms of logistics activities include — * Transportation + Storage + Packaging + Materials handling * Information maintenance + Purchasing + Designing the package for smooth handling. + Designing the package for proper storage. + Designing the package for protection against loss and damage.+ Meaning of Logistics LOGISTICS Forms of logistics activities include — * Transportation + Storage + Packaging + Materials handling * Information maintenance + Purchasing + Equipment selection , + Equipment replacement policies , + Order picking policies + Stock storage and retrieval.+ Meaning of Logistics LOGISTICS Forms of logistics activities include — * Transportation + Storage + Packaging + Materials handling * Information maintenance + Purchasing + Information collection, storage, and manipulation + Data Analysis * Control Procedures.+ Meaning of Logistics LOGISTICS Forms of logistics activities include — * Transportation + Storage + Packaging + Materials handling * Information maintenance + Supply source selection + Purchase Timings. + Purchase Quantities.+ Meaning of Logistics * Meaning of Logistics Management LOGISTICS The management activities that include inbound and outbound transportation management, fleet management, warehousing, materials handling, order fulfilment, inventory management, demand and supply planning and management of third-party logistics service providers. Logistics also encompasses various aspects of customer service, procurement, planning and scheduling production and packaging.+ Meaning of Logistics + Meaning of Logistics Management * Difference between Supply Chain Management & Logistic: Management LOGISTICS Supply Chain Management Logistics Management ‘Scope: A broader concept that encompasses the entire network of entities, activities, resources, and technologies involved in the creation and delivery of products or services to the end customer, ‘Scope: Primarily focuses on the movement, storage, and flow of goods and services. It encompasses activities like transportation, warehousing, inventorymanagement, packaging, and handling. Focus: On the coordination andintegration of various activities, including procurement, production, distribution, logistics, finances and even marketing and sales. Focus: On the physical movement and handling of goods to ensure that the right productis deliveredto the right place, at the right time, and inthe right condition Operates at a strategic level, involving strategic planningand decision-makingaimed at achieving competitive advantages, fostering collaboration, and managing relationships with suppliers, manufacturers, distributors, and customers, Focus is on operational Level and deals with day-to-day activities and execution, ensuring, the smooth flow of goods through transportation and storage networks. Functions: sourcing, demand forecasting, supplier relationship management, inventory optimization, and coordination among different entitiesto ensure a smooth flow of goods and information. Functions: includes tasks such as transportation planning, route optimization, inventory management, warehouse management, and order fulfillment.+ Meaning of Logistics * Meaning of Logistics Management * Difference between Supply Chain Management & Logistics Management * Role of Logistics in SCM. LOGISTICS The role of logistics in SCM can be summarizedas - + RightTime + Right Price + Right Quantity + Right Place + Right Quality+ Meaning of Logistics * Meaning of Logistics Management * Difference between Supply Chain Management & Logistics Management * Role of Logistics in SCM. LOGISTICS The role of logistics in SCM can be summarized as - Right Time Right Price Right Quantity Right Place Right Quality To ensure that the customers get what they want as and when they demand it. ‘Supply chain can schedule the production and get the product ready but it is logistics management that has to ensure that the product reaches the customer on time every time.+ Meaning of Logistics * Meaning of Logistics Management * Difference between Supply Chain Management & Logistics Management * Role of Logistics in SCM. LOGISTICS The role of logistics in SCM can be summarized as - Right Time Right Price Right Quantity Right Place Right Quality In era of tough competition business need to ensure competitive price. Logistics being the major cost component (almost 30 per cent) it becomes critical. If business have to offer the right price to the customers, logistics has to be cost competitive.LOGISTICS * Meaning of Logistics The role of logistics in SCM can be summarizedas - + Meaning of Logistics + Right Time Management + Right Price * Difference between 1 Right Quantity Supply Chain Right Place Management & Logistics * Right Quality Management + Role of Logistics in SCM. SCM can identify how much quantity the customer requires to get satisfied, while it is logistics management that can ensure that the customer gets what he wants.+ Meaning of Logistics * Meaning of Logistics Management * Difference between Supply Chain Management & Logistics Management * Role of Logistics in SCM. LOGISTICS The role of logistics in SCM can be summarized as - Right Time Right Price Right Quantity Right Place Right Quality Driven by the demanding customers and competition, businesses try to. deliver the product nearer and nearer to where the customer wants it. Right place could be the retailers’ end or the actual place where the customer is located. Itis the responsibility of the logistics to ensure delivery of the product at the right place.LOGISTICS + Meaning of Logistics The role of logistics in SCM can be summarizedas - * Meaning of Logistics + Right Time Management + Right Price * Difference between “Bight ciantity Supply Chain Management & Logistics Management « Role of Logistics in SCM. ‘Supply chain can ensure quality of product at the manufacturing end but the responsibility of ensuring quality at the customers’ end rests with logistics management.LOGISTICS + Meaning of Logistics The role of logistics in SCM can be summarizedas - * Meaning of Logistics + Right Time Management + Right Price * Difference between “Bight ciantity Supply Chain Management & Logistics Management « Role of Logistics in SCM. ‘Supply chain can ensure quality of product at the manufacturing end but the responsibility of ensuring quality at the customers’ end rests with logistics management.Meaning of Logistics Meaning of Logistics Management Difference between Supply Chain Management & Logistics Management Role of Logistics in SCM. Objectives of Logistics Management LOGISTICS To increase the efficiency of inbound and outbound logistics. To enhance customer experience by ensuring delivery timelines, managing inventory and eliminating disruptions in the supply chain. To ensure a quick response in order to manage the supply chain activities in the shortest time frame. To reduce operational cost by improving material handling, explaining delivery disruptions and minimizing operational costs. To maintain optimal quality of the product throughout the supply chain. To ensure efficient flow of materials and information during the entire supply chain operation.Meaning of Logistics Meaning of Logistics Management Difference between Supply Chain Management & Logistics Management Role of Logistics in SCM. Objectives of Logistics Management Components & Functions of Logistics Management LOGISTICS 1. Demand Planning 2. Storage and Material Handling 3. Inventory Management 4, Fleet Management 5. Transportation Management 6. Information and Control