SUPPLY CHAIN MANAGEMENT LECTURE NO: 1 DATE: 11/10/23UNIT-1 SUPPLY CHAIN CONCEPTS Objectives of a Supply Chain, Stages of Supply chain, Value Chain Process Cycle view of Supply Chain Process, Key issues in SCM, logistics & Supply Chain Drivers and obstacles, Supply chain strategies, strategie fit, Best practices in SCM, Obstacles of streamlined SCM.SUPPLY CHAIN CONCEPTS Meaning of Supply Chain Anetwork of entities, activities, technologies, information and processes involved in the procurement of resources required to produce a output, the actual production of the output and finally delivering the output to the end consumers. These activities include — + Sourcing raw materials and parts + Manufacturing and assembling the products. + Warehousing + Information (order entry and tracking) * Distribution through the channels * Delivery to the customer.SUPPLY CHAIN CONCEPTS Meaning of Supply Chain Components of Supply ChainSUPPLY CHAIN CONCEPTS Cascoreiens + External Suppliers - supply and transport raw materials and components . to the manufacturers. Meaning of Supply Chain Components of Supply + Internal Function- manufacturers transform these materials and Chain components into finished products. Classification + External Distributor - finished products are that are shipped either to the manufacturer's own distribution centers or to wholesalers.SUPPLY CHAIN CONCEPTS Meaning of Supply Chain 8 Components of Supply Chain ClassificationMeaning of Supply Chain Components of Supply Chain SUPPLY CHAIN CONCEPTS Tier ~ 1: The supplier that provides materials directly to the processing facility. The dairy farmer, the cardboard container manufacturer, the company making the labels and the company providing the plastic container. Tier -2: The companies that directly supply materials and services to tier1 supplier in the supply chain. The paper mill and the chemical processing plant are tier two suppliers because they directly supply tier one suppliers but do not directly supply the packaging operation. Tier -3: The companies that directly supply materials and services to tier 2 supplier in the supply chain. The timber company that provides wood to the paper mill is a tier three supplier, as is the chemical extraction plant that supplies raw materials to the chemical processing plant.Meaning of Supply Chain Components of Supply Chain SUPPLY CHAIN CONCEPTS Internal functions in, a dairy products supply chain are- + Processing - converts raw milk into dairy products and packages these products for distribution. + Purchasing - selects appropriate suppliers, ensures that suppliers perform Up to expectations, administers contracts, and develops and maintains good supplier relationships. + Production planning and control - schedules the processing of raw milk into dairy products. + Quality assurance- oversees the quality of the dairy products. + Shipping - selects external carriers to transport the product from the manufacturing facility to its destination.Meaning of Supply Chain Components of Supply Chain SUPPLY CHAIN CONCEPTS External Distributors: The Outbound Supply Chain + Design of Distribution Network. _ + Logistics Management. + Channel Management. A distribution network refers to the set of outbound supply chain entities that are geographically located to stock products and serve end customers by satisfying the demand in a responsive manner, ‘These entities may include company-owned distribution centers, independent distributors, stockists, retailers, and third-party logistics (3PL) providers. (0906 Parka} DitaMeaning of Supply Chain Components of Supply Chain SUPPLY CHAIN CONCEPTS External Distributors: The Outbound Supply Chain + Design of Distribution Network. + Logistics Management. + Channel Management. Logistics management refers to the set of activities involved in the physical movement of goods across the supply chain. It involves planning shipments, scheduling carriers, and route planning. (0906 Parka} DitaMeaning of Supply Chain Components of Supply Chain SUPPLY CHAIN CONCEPTS External Distributors: The Outbound Supply Chain + Design of Distribution Network. + Logistics Management. + Channel Management. Channel management refers to the different methods of communication businesses use to promote and distribute their products and services. Channel management also involves relationship management. (0906 Parka} DitaMeaning of Supply Chain Components of Supply Chain SUPPLY CHAIN CONCEPTS ¥ External Suppliers - supply and transport raw materials and components to the manufacturers. Y Internal Function- manufacturers transform these materials and components into finished products. Y External Distributor - finished products are that are shipped either to the manufacturer's own distribution centers or to wholesalers. ‘The components can also be classified as— ¥ Upstream (inbound) Members- the supplier of raw material and other componentsnecessary for production. v ¥ Downstream (Outbound) Members - the distributors, warehouses, and eventual end-use customersMeaning of Supply Chain Components of Supply Chain Classification ‘Stages of Supply Chain SUPPLY CHAIN CONCEPTS Procurement Stage: This stage involves acquiring the raw materials and components needed to produce the product. Manufacturing Stage: This stage involves converting the raw materials and components into the finished product. Distribution Stage: This stage involves getting the finished product to the end user.Meaning of Supply Chain Components of Supply Chain Classification Stages of Supply Chain Flow in Supply Chain SUPPLY CHAIN CONCEPTS Material Flow Financial Flow Information FlowMeaning of Supply Chain Components of Supply Chain Classification Stages of Supply Chain Flow in Supply Chain Supply Chain Models SUPPLY CHAIN CONCEPTS Supply Chain Models Ways of organizing the various participants and processes within a supply chain. Points to Note — Each model has its unique benefits. Help businesses streamline their supply chain operations, leading to reduced costs, improved customer satisfaction, and, ultimately, higher profits. Allow a business to tailor its approach to meet its specific needs and goals.Meaning of Supply Chain Components of Supply Chain Classification Stages of Supply Chain Flow in Supply Chain Supply Chain Models SUPPLY CHAIN CONCEPTS The six major types of supply chain models are - * Continuous flow mode! * Fast chain model * Efficient chain model + Agile supply network model + Custor-configured supply chain model + Flexible supply chain modelMeaning of Supply Chain Components of Supply Chain Classification Stages of Supply Chain Flow in Supply Chain Supply Chain Models SUPPLY CHAIN CONCEPTS The six major types of supply chain models are - + Continuous flow model + Fast chain model + Efficient chain model + Agile supply network model + Custom-configured supply chain model + Flexible supply chain model The model works best— + When the purpose is to maintain continuous, consistent delivery of resources and goods. + When the supply chain is well developed and there is little fluctuation in supply and demand. + There is little design variation or adjustments in the products. + For manufacturing commodities and low product prices Example - Amazon.Meaning of Supply Chain Components of Supply Chain Classification Stages of Supply Chain Flow in Supply Chain Supply Chain Models SUPPLY CHAIN CONCEPTS The six major types of supply chain models are - * Continuous flow model + Fast chain model + Efficient chain model + Agile supply network model + Custom-configured supply chain model + Flexible supply chain model The model works best— + When the business focuses on quickly and efficiently meeting customer demand. + When the product lines that have brief life cycles. + When a company releases new products to have competitive edge . Example - A fashion designer, for instance, might have a particular line of designs for a season. Since the fashion line is typically based on current trends, the company must introduce it to the market to maximize profitsMeaning of Supply Chain Components of Supply Chain Classification Stages of Supply Chain Flow in Supply Chain Supply Chain Models SUPPLY CHAIN CONCEPTS The six major types of supply chain models are - * Continuous flow model + Fast chain model + Efficient chain model + Agile supply network model + Custom-configured supply chain model + Flexible supply chain model The model works best— + Inhighly competitive markets where maintaining a competitive edge requires high levels of efficiency in delivery logistics. + Inssituations where it is possible to predict the demand of the product accurately. + The cost of raw materials and commodities plays a significant role in this model + When the focus is on reducing waste. Example — Steel'&Cement industrySUPPLY CHAIN CONCEPTS Meaning of Supply Chain The six major types of supply chain models are - Components of Supply * Continuous flow model Chain + Fast chain model + Efficient chain model Classification * Agile supply network model Stages of Supply Chain * Custom-configured supply chain model Flow in Supply Chain + Flexible supply chain model Supply Chain Models The model works best— + Businesses that deal with specialist goods needing extra care. + When market conditions are challenging or unpredictable and needs quick adaptation to changing market conditions. + When there is a strong communication and collaboration within the supply chain network. Example - Clothing and accessory retailer ZaraMeaning of Supply Chain Components of Supply Chain Classification ‘Stages of Supply Chain Flow in Supply Chain ‘Supply Chain Models SUPPLY CHAIN CONCEPTS The six major types of supply chain models are - * Continuous flow model Fast chain model Efficient chain model Agile supply network model Custom-configured supply chain model + Flexible supply chain model The model works best— + When a hybrid of the agile and continuous flow models is required. + There are choices for customer customization. Example A computer company offering individualized computer configurations to meet their customers’ specific needs.SUPPLY CHAIN CONCEPTS Meaning of Supply Chain The six major types of supply chain models are - Cornpeneseser sanety + Continuous flow model * Fast chain model Chain + Efficient chain model Classification + Agile supply network model Stages of Supply Chain + Custom-configured supply chain model Flow in Supply Chain + Flexible supply chain model Supply Chain Models The model works best— + When there is a high fluctuation in demand.Meaning of Supply Chain Components of Supply Chain Classification ‘Stages of Supply Chain Flow in Supply Chain ‘Supply Chain Models ‘Supply Chain Process SUPPLY CHAIN CONCEPTS The series of interconnected activities and steps involved in the production, and delivery of goods or services from suppliers to end customers. The supply chain process can be divided into the following phases: * Demand Forecasting and Planning + Procurement + Production + Warehousing & Distribution * Order Processing and Fulfillment + Transportation and Logistics + Customer Service and Support + Feedback and Continuous Improvement + Risk Management and Resilience There are two ways to look or manage these supply chain processes — One js Push and Pull View and the other is the Cycle view.Meaning of Supply Chain Components of Supply Chain Classification Stages of Supply Chain Flow in Supply Chain Supply Chain Models Supply Chain Process Push & Pull Cycle View SUPPLY CHAIN CONCEPTS In Push & Pull view the supply chain processes are divided into two categories depending on whether they are executed in response to a customer order (pull) or in anticipation of a customer order (push). Pull: Execution is initiated in response to a customer order (reactive). Push: execution is initiated in anticipation of customer orders (speculative) Example— Push Strategy - Coca-Cola Pull Strategy - Toyota In real life, most businesses use a mix of both push and pull strategies.SUPPLY CHAIN CONCEPTS Meaning of Supply Chain In Cycle View the supply chain processes are divided into a series of cycles, Components of Supply each performs at the interfaces between two successive supply chain stages. Chain Each cycle occurs at the interface between two successive stages. Classification Stages of Supply Chain * Customer order cycle (customer-retailer) Flow in Supply Chain * Replenishment cycle (retailer-distributor) Supply Chain Models ‘+ Manufacturing cycle (distributor-manufacturer) Supply Chain Process + Procurement cycle (manufacturer-supplier) Push & Pull View cycle ViewMeaning of Supply Chain Components of Supply Chain Classification Stages of Supply Chain Flow in Supply Chain Supply Chain Models Supply Chain Process Push & Pull View Cycle View SUPPLY CHAIN CONCEPTS Castomer Order Process 1. Customer Amal 2. Customer Order Entry 3, Customer Order Pullfills 4. Customer Onder Receiving Customer Order Cycle Beplenbsbment Process 1. Retail Order Trigger 2. Retail Onder Entry 3. Retail Order Fullfillment 4. Retail Order Receiving Replenishment Cycle Manufacturing Process 1, Order Amival 2 Production Scheduling 3. Mamufactring Shipping 4, Receiving Manufacturing Cycle Procurement Process 1. Component Order Arrival 2 Production Scheduling 3, Manufacturing Shipping 4 Receiving Procurement CycleMeaning of Supply Chain Components of Supply Chain Classification Stages of Supply Chain Flow in Supply Chain Supply Chain Models Supply Chain Process SUPPLY CHAIN CONCEPTS Customer ecies the > ‘orceranataker \ (/eatamer sal st locaton of chic to make 3 buying decison Soalisto conver ‘istomer ali ‘stom order _ Customer Arrival Customer Order Receivi (CUSTOMER ORDER erate Customer Order Customer Order Fulfilment) “ss “customer orders wes » era Seat ‘well communicated to eee, Coast do on te sebeerytocustomerSUPPLY CHAIN CONCEPTS Meaning of Supply Chain Components of Supply ema = Chain SGalatonaane ree pod romania oone | Component manufacturing Scheduling and shipping ‘haesbadcn| \ ‘heeds rhe mortar Prtuctengnty errs altosmamiecrterMeaning of Supply Chain Components of Supply Chain Classification ‘Stages of Supply Chain Flow in Supply Chain ‘Supply Chain Models ‘Supply Chain Process Push & Pull View cycle View Meaning of Value Chain & Demand Chain SUPPLY CHAIN CONCEPTS The value chain process is a framework for understanding and managing the flow of goods and services from suppliers to customers. It is based on the idea that each step in the supply chain adds value to the product or service. Points to Note ~ Value chain represents the series of activities and processes that a company engages in to create value for its customers and ultimately deliver products or services to the market. * Each activity in the value chain contributes to the final product's value, and managing these activities effectively is crucial for achieving competitive advantage. * The value chain concept was introduced by Michael Porter in his book "Competitive ‘Advantage: Creating and Sustaining Superior Performance."SUPPLY CHAIN CONCEPTS Meaning of Supply Chain Components of Supply com The activities in the value chain process can be divided into two main categories - ain Classification Primary Activities: These are the core activities directly involved in the creation, Stages of Supply Chain production, and delivery of products or services. Flow in Supply Chain Support Activities: These activities are essential for supporting the primary Supply Chain Models activities and include: Supply Chain Process Push & Pull View Cycle View Meaning of Value Chain & Demand ChainSUPPLY CHAIN CONCEPTS Meaning of Supply Chain Components of Supply The activities in the value chain process can be divided into two main categories - ain Classification * Primary Activities: These are the core activities directly involved in the creation, ‘Stages of Supply Chain production, and delivery of products or services. Flow in Supply Chain Primary activities include- Supply Chain Models + Inbound Logistics. ‘Supply Chain Process * Operations. + Outbound Logistics. + Marketing and Sales. cycle View + Service. Meaning of Value Chain & Demand Chain Push & Pull ViewSUPPLY CHAIN CONCEPTS Meaning of Supply Chain Components of Supply —_The activities in the value chain process can be divided into two main categories - ain Classification + Primary Activities: These are the core activities directly involved in the creation, stages of Supply Chain production, and delivery of products or services. Flow in supply Chain Primary activities include- - ; ‘Supply Chain Models + Inbound Logistics. Inbound Logisies: This invalves the + Operations. receiving, warehousing, and inventory Supply Chain Process + Outbound Logistics. management of raw materials and Push & Pull View + Marketing and Sales. components necessary for production. This Cycle View + Service. activity involves receiving, storing, and Meaning of Value Chain & transporting raw materials and components. Demand ChainSUPPLY CHAIN CONCEPTS Meaning of Supply Chain Components of Supply —_The activities in the value chain process can be divided into two main categories - ain Classification + Primary Activities: These are the core activities directly involved in the creation, stages of Supply Chain production, and delivery of products or services. Flow in Supply Chain Primary activities include- . ; ‘Supply Chain Models + Inbound Logistics. Operations: This inclufes the actual h * Operations. manufacturing or production process where Supply Chain Process + Outbound Logistics. raw materials are transformed into finished Push & Pull View + Marketing and Sales. products. This activity involves transforming Cycle View + Service. raw materials and components into finished products Meaning of Value Chain & Demand ChainSUPPLY CHAIN CONCEPTS Meaning of Supply Chain Components of Supply The activities in the value chain process can be divided into two main categories - ain Classification + Primary Activities: These are the core activities directly involved in the creation, ‘Stages of Supply Chain production, and delivery of products or services. Flow in supply Chain Primary activities include- , . supply Chain Models + Inbound Logistics. Outbound Logistics: After production, the Supply chain P + Operations. finished products need to be stored, upply Chain Process + Outbound Logistics. packaged, and shipped to customers or Push & Pull View Marketing and Sales. distribution centers. This activity involves cycle View + Service, storing and transporting finished products to customers. Meaning of Value Chain & Demand ChainSUPPLY CHAIN CONCEPTS Meaning of Supply Chain Components of Supply The activities in the value chain process can be divided into two main categories - ain Classification + Primary Activities: These are the core activities directly involved in the creation, ‘Stages of Supply Chain production, and delivery of products or services. Flow in supply Chain Primary activities include- . supply Chain Models + Inbound Logistics. Marketing and Sales: These activities involve Supply Chain P + Operations. marketing strategies, sales efforts, and upply Chain Process + Outbound Logistics. customer engagement to promote and sell Push &Pull View Marketing and Sales products or services. This activity involves cycle View + Service, promoting and selling finished products to customers. Meaning of Value Chain & Demand ChainSUPPLY CHAIN CONCEPTS Meaning of Supply Chain Components of Supply —_The activities in the value chain process can be divided into two main categories - ain Classification + Primary Activities: These are the core activities directly involved in the creation, ‘stages of Supply Chain production, and delivery of products or services. Flow in supply Chain Primary activities include- Supply Chain Models + Inbound Logistics. Service: After-sale support, customer + Operations. service, and maintenance activities aimed at Supply Chain Process + Outbound Logistics. enhancing customer satisfaction. This Push &Pull View Marketing and Sales. activity involves providing support to Cycle View + Service. customers after they have purchased a duct fice. Meaning of Value Chain & Product or service Demand ChainSUPPLY CHAIN CONCEPTS Meaning of Supply Chain Components of Supply —_The activities in the value chain process can be divided into two main categories - ain Classification + Support Activities: These activities are essential for supporting the primary stages of Supply Chain activities and include: Flow in Supply Chain supply Chain Models Support Activities include:- Procurement: The process of sourcing and + Procurement: acquiring raw materials, components, and Supply Chain Process + Technology Development: other necessary inputs for production. Push & Pull View + Human Resource Management: Effective procurement can impact the cost Cycle View * Infrastructure: and uality ofthe final product. Ths activity . . involves acquiring the raw materials an Meaning of Value Chain & components needed to produce finished Demand Chain products.SUPPLY CHAIN CONCEPTS Meaning of Supply Chain Components of Supply —_The activities in the value chain process can be divided into two main categories - ain Classification + Support Activities: These activities are essential for supporting the primary ‘stages of Supply Chain activities and include: Flow in Supply Chain supply Chain Models Support Activities include:- Technology Development: Research, * Procurement: development, and innovation to improve Supply Chain Process * Technology Development: products, processes, or services. This can Push & Pull View * Human Resource Management: ead to product differentiation and cycle View + Infrastructure: competitive advantage. This activity involves . . leveloping new technologies to improve the Meaning of Value Chain & efficiency and effectiveness of the supply Demand Chain chain.SUPPLY CHAIN CONCEPTS Meaning of Supply Chain Components of Supply —_The activities in the value chain process can be divided into two main categories - ain Classification * Support Activities: These activities are essential for supporting the primary ‘stages of Supply Chain activities and include: Flow in Supply Chain supply Chain Models Support Activities include:- Human Resource Management: Recruiting, * Procurement: training, and managing the workforce to Supply Chain Process + Technology Development: ensure employees have the necessary skills, Push & Pull View * Human Resource Management: and knowledge to perform their roles cycle View + Infrastructure: effectively. This activity involves recruiting, training, and developi loyees. Meaning of Value Chain & Taining, and developing employees Demand ChainSUPPLY CHAIN CONCEPTS Meaning of Supply Chain Components of Supply —_The activities in the value chain process can be divided into two main categories - ain Classification + Support Activities: These activities are essential for supporting the primary stages of Supply Chain activities and include: Flow in Supply Chain ‘Supply Chain Models Support Activities include:- Infrastructure: Building and maintaining the * Procurement: infrastructure, including facilities, Supply Chain Process . Technology Development: Push &Pull View * Human Resource Management: + Infrastructure: information technology, and other resources needed to support the entire value chain. cycle View This activity involves providing the physical , , and organizational infrastructure needed to Mganing of Value Chain & support the supply chain,SUPPLY CHAIN CONCEPTS Meaning of Supply Chain Components of Supply —_The activities in the value chain process can be divided into two main categories - ain Classification + Support Activities: These activities are essential for supporting the primary stages of Supply Chain activities and include: Flow in Supply Chain ‘Supply Chain Models Support Activities include:- Infrastructure: Building and maintaining the * Procurement: infrastructure, including facilities, Supply Chain Process . Technology Development: Push &Pull View * Human Resource Management: + Infrastructure: information technology, and other resources needed to support the entire value chain. cycle View This activity involves providing the physical , , and organizational infrastructure needed to Mganing of Value Chain & support the supply chain,SUPPLY CHAIN CONCEPTS Meaning of Supply Chain The demand chain is a network of organizations that work together to Components of Supply create, sense, and respond to customer demand. Chain Points to Note ~ + Demand chain includes customers, suppliers, manufacturers, distributors, and retailers. Classification Stages of Supply Chain Flow in Supply Chain * Demand chain specifically focuses on the processes and activities Supply Chain Models associated with understanding and responding to customer demand effectively. Supply Chain Process * Demand chain is a customer-centric approach that aims to align an Push & Pull View organization's entire value chain with customer preferences and market Cycle View demands. Meaning of Value Chain & Demand ChainMeaning of Supply Chain Components of Supply Chain Classification ‘Stages of Supply Chain Flow in Supply Chain ‘Supply Chain Models ‘Supply Chain Process Push & Pull View cycle View Meaning of Value Chain & Demand Chain SUPPLY CHAIN CONCEPTS The demand chain can be divided into two main stages — Demand Sensing - This stage involves understanding and forecasting customer demand. Businesses need to understand what products and services customers want, when they want them, and where they want them. Demand Fulfillment - This stage involves delivering products and services to customers. Businesses need to have the right inventory levels, transportation capabilities, and distribution networks in place to meet customer demand.