Supply Chain

Management
Session 1
Supply Chain Management
Overview
 Learning Objectives
➢What is Supply Chain Management
➢How it differs from traditional Purchase
and Materials function
➢How it gained momentum from
Purchase and Materials
➢General Supply Chain Model for
Manufacturing and Service Industry
➢Summary
 What is Supply Chain
Management
➢Total systems Approach to Manage the
entire Flow of Information, Materials &
Services through Factories & Warehouses
to the End Customers
➢Information Sharing, Process
Specialization & Integrated Approach for a
Proper Business Forecast by Avoiding
Customer Surprises & by Avoiding
Postponement from Vendors to Customers
 How it Differs from Traditional
Purchase and Materials Function

➢Materials Management is Concerned with

the Flow of Materials to Manufacturing
Departments from Suppliers End

➢Learning How Much to Set, When to Set,

From Where to Set and at What Price &
Quality & last but not the Least, Continuity
of Supply
 How it Gained Momentum
from Purchase & Materials
➢Reduce cost of Making the Purchase
➢Reduce Transportation Cost
➢Reduce Production Cost
➢Improve Product Quality
➢Reduce Lead-Time
➢Collaborative Approach Between Vendor
& Customer – Business Partner
Relationship
 General Supply Chain Model
for Manufacturing and Service
Industry
LEGAL ACCOUNTS

Purchase is
IT R&D
the Link PURCHASE
between the
Organization
its Suppliers
OPERATIONS DESIGN
SUPPLIERS
 Summary

➢A Systems Approach for the End-to-End

Processes
➢Avoiding Surprises at any Point of Time
but at Bare-Minimum Operational &
Holding Cost
➢Role of Supply Chain Creates a Platform
for Business Partner Relationship
Between Customers & Vendors
Supply Chain Management

Session 2
Scope and Relevance
 Learning Objectives
➢Activities Involved along with
Objectives
➢How to Overcome Traditional Approach
➢21st Century Supply Chain Activities to
Initiatives
➢Latest techniques used –TQM, JIT, Re-
Engineering
➢Summary
 Activities involved along
with objectives
➢Reduce Supply Chain Cost to Minimum
Possible Level
➢Maximize Overall Value Generated
➢Achieve Maximum Supply Chain
Profitability
➢Improve Customer Satisfaction
➢Reduce Inventory Carrying Cost
 How to Overcome
Traditional Approach
➢Avoid Overstocking
➢Prevent Postponement & Delay in
Shipment
➢Effective Coordination between Internal
Customers for External Dissatisfaction
➢Quality Management – Sourcing to
Delivery
 21st Century Supply Chain
Activities to Initiatives
➢ Firm’s Collaborative Approach to Leverage
Strategic Positioning to Improve Operating
Efficiency
➢ Information, Service, Product, Knowledge &
Financials are the Key Drivers to Set SCM in
Practice.
➢ Rapid Emergence of SCM is Driven by Quick
Response, Globalization & Holistic Approach to
act as a Benchmark for Proper Positioning.
 Latest Techniques Used –
TQM, JIT, Re-Engineering
➢TQM – A management Philosophy that
takes as its Central Focus to Improve
Quality of Products & Services for
Creating Firm’s Image in the Market.
➢JIT – Another Management Tool to
Improvise on Less Inventory & Making
Goods Available at Appropriate Location
➢Re-Engineering – A Business Strategy to
Allocate & Relocate as Per Situation
 Summary
➢Arrange Quality Material on Time

➢Focus on Business Partner relationship to

Avoid Overstocking

➢Emphasis on Value Creation

➢Positioning by Way of Differentiation

Supply Chain Management

Session 3
Role and Importance of
Suppliers
 Learning Objectives

➢Role of Supply Chain Manager

➢Objectives of Supply Chain Manager
➢Supplier Management and its Functions
➢Summary.
 Role of Supply Chain
Manager
➢ Set up Planning Premises in developing a set of
metrics to monitor efficiency, cost Quality &
Value to the Customers
➢ Choose Suppliers that will deliver goods &
Services company needs to create a product
➢ Schedule activities which are necessary for
Production, Testing, Packaging & Delivery
➢ Create Network for receiving defective & excess
products back from customers who have
problems with delivered Products
 Objectives of Supply
Chain Manager
➢Reduce cost of making the purchase
➢Reduce transportation Cost
➢Reduce Production Cost
➢Improve Product Quality
➢Improve Product Design
➢Reduce Inventory Costs
➢Improve Customer Satisfaction
➢Introduce New Products or Processes
 Supplier Management and
its Functions
• Assess all relevant quantitative Costs
• Assess all Qualitative Costs
• Review capabilities of Current Suppliers
• Evaluate new Suppliers
• Make & Implement Decisions
• Supplier Scheduling
• Value Analysis & Value Engineering
 Summary

➢Focus on Proper Supplier Network

➢Qualitative & Quantitative for effective
supplies
➢Value Analysis & Value Engineering for
proper Supplier Evaluation
➢Improve Customer Satisfaction through
proper Network Management
Supply Chain Management

Session 4
Basic Buying Process
 Learning Objectives
➢Objectives of Inventory Management
and Control.
➢Scope and Importance of Inventory
Management.
➢Roles and Responsibilities of Supply
Chain Manager.
➢Summary
 Objective of Inventory
Management & Control
➢ Planning Material to avoid Stock outs &
Shortages
➢ From Retail point it is Velocity of Buying &
Selling
➢ Centralized Inventory Management helps
effective Co-ordination & Communication
➢ When to Order, from where, how much, at what
price & at what location
➢ Understand criticality of safety stocks combined
with uncertainty
 Scope & Importance Of
Inventory Manager
➢ Improve accuracy of Forecasts
➢ Reduce Number of back orders
➢ Economies of Scale in Manufacturing,
Purchasing & Transportation
➢ Balancing Supply & Demand
➢ Provide Protection & act as a buffer
➢ Inventories influence firms financial performance
by understanding ROI, Net Profit Margin and
Return on Asset Managed
 Role & Responsibility Of
Supply Chain
➢ Make or Buy/Make Buy Decisions
➢ Supplier Scheduling
➢ Value Analysis/Value Engineering
➢ Supplier Evaluation
➢ Evaluating scope for new Suppliers
➢ Cross Co-ordination amongst different
departments
➢ Managing Quality and healthy relationship with
Suppliers
 Summary
➢Centralized Inventory Management helps
SCM Managers for effective Planning
➢Balancing Demand & Supply
➢Healthy Relationship with Suppliers
➢Cross Function Co-ordination to improve
accuracy
Supply Chain Management

Session 5
Managing Supply Chain
 Learning Objectives
➢Procurement Process.
➢Relevance of procurement for
Manufacturing & Services.
➢Importance of quality as an interface.
➢Logistics interface for managing supply
chain.
➢Summary.
 Procurement Process

➢Ask for Quotations

➢Negotiations
➢Vendor Audit
➢Sampling
➢Quality Approval
➢Trial Order
➢Business Partner Relationship
 Relevance of Procurement
for Manufacturing & Services
➢Lean Supplies
➢Zero Defect & JIT Supplies
➢Continuous Improvement
➢Exploring New Opportunities for R & D
➢Business Partner Relationship
 Importance Of Quality as
Interface
➢Always Remember the GIGO Principle
(Garbage In Garbage Out)
➢Quality First, Customer Always
➢Supplier Development using Kaizen &
Total Quality Management Principles
 Logistics Interface for
Managing Supply Chain
➢Integration of Information, Transportation,
Inventory, Warehousing & Packaging
➢Geographically Allocating Raw-Material,
Work-In-Progress from Suppliers to
Manufacturing Sites
➢Commitment to Continuous Improvement
➢Adds Value to facilitate Sales to meet
Customer Demand
 Summary
➢Integration through Logistics help Supplier
Chain manager to take quick & effective
decisions
➢Business Partner Relationship for
Continuous Improvement
➢Value addition for exceeding Customer
demand for Branding
Supply Chain Management

Session 6
SCM - Strategies.
 Learning Objectives
➢Out Sourcing and Value Chain
Management.
➢Multiple, Few, Vertical, Keiretsu and
Virtual Companies.
➢Strategic Focus on Supply Chain
Management.
➢Role of Purchasing in Supply Chain
Management.
➢Summary
 Out Sourcing & Value Chain
Management
➢Support Future Growth & Business
Directions
➢Reduce Cost
➢Focus on Core Competencies
➢Greater Economies Of Scale, Process
Efficiencies & Enhance domain Expertise
➢Value Chain includes Production, R & D,
Materials, Marketing, Human Resources,
Information Systems & firms Infrastructure
 Multiple, Few, Vertical,
Keiretsu & Virtual Companies
➢Manufacture same products at multiple
locations
➢Manufacture same Products at few
locations
➢Continuous building of process
capabilities irrespective of locations
➢Creating Virtual Company as one of the
SBU
 Strategic Focus On Supply
Chain Management
➢Integration through Strategic Business
Units
➢Business Environment by understanding
Strengths & Weakness of the Market as
well as Organization
➢Impact Of Technology & Use OF MIS
➢Reporting responsibility at the CEO level
 Role Of Purchasing In
Supply Chain
➢ Inbound Logistics ( Receive, Store &
Disseminate Inputs)
➢ Operations ( Machinery, Assembling, Packing)
➢ Out bound Logistics ( Collecting, Storing &
Physically distributing Finished Goods to
Customers)
➢ Sales & Marketing activities with Advertising,
Distribution, Sales Promotion
➢ Procurement of Raw Materials, Consumables
➢ Technical Development for Product and Process
Design
 Summary
➢Manufacture products at location which
will give better ROI
➢In bound & Out bound Logistics acts as
key differentiator to manage Supply Chain
➢Integration to be taken on top priority to
avoid miss communication between
internal Customers for external di-
satisfaction
Supply Chain Management

Session 7
Bench Marking SCM
 Learning Objectives
➢Quality.
➢Cost.
➢Lead Time
➢Strategic Location.
➢Shortages.
➢Summary
 Quality
➢Conformance to the given requirements
➢Fitness for Use
➢It’s a journey & Not the final destination
➢Material to be procured for right Quality as
per the specifications given by technical
department
 Cost
➢Material to be procured at a price which
has to justify
➢Not to Compromise on price which might
give unfavorable results
➢Rejection of goods should not be at the
cost of poor inputs
➢Create value addition and not cost addition
 Lead Time
➢Integration of Cross Function Co-
ordination and Suppliers-Top Priority
➢Supplier Scheduling & Re-scheduling
keeping in mind variations in demand
forecasting
➢Sufficient lead time to be given to
Suppliers to avoid surprises
 Strategic Location
➢Manufacture products where costs are low
➢Avail Tax benefits
➢Monitor smooth flow of materials and
avoid delays due to poor Transportation
➢Allocate sufficient resources for enhancing
Productivity to deliver the best results from
that Strategic Location
 Shortages
➢Poor Planning Create Shortages
➢Non availability of Product triggers
customers to become butterfly
➢Organization invites competition due to
Shortages
➢Supply Chain Managers should be alert to
avoid any kind of Shortages for Raw
Materials or Finished Goods
 Summary
➢Quality should be treated on top priority
➢Relationship with Suppliers can reduce
purchasing cost
➢J.I.T. philosophy to be adopted to avoid
shortages vi a vi excess stocking
➢Strategic Location to evaluate where and
when to manufacture
Supply Chain Management

Session 8
SCM Process Tools
 Learning Objectives
➢Make / Buy Or Make-Buy Decisions.
➢Supplier Scheduling.
➢Value Analysis and Value Engineering.
➢Supplier Certification.
➢Summary.
 Make/Buy or Make-Buy
Decision
➢Lower Cost as it is In-House Production
➢Facilitating Specialized Investments
➢Product Technology
➢Improved Scheduling
Advantages of Buy:
➢Strategic Flexibility
➢Lower Cost
 Supplier Scheduling
➢Based on Demand Forecasting
➢Location wise arranging Raw-materials,
Spares & Components
➢Understanding Lead time of each Supplier
➢Avoiding excess stocks at Go downs &
Ware Houses
➢Avoiding Shortages at Plant level
 Value Analysis/
Value Engineering
➢From Suppliers point of view this is mostly
done at the corporate level
➢Supply Chain Manager involves various
Permutation Combinations to evaluate
decision making
➢Make/Make-Buy decisions are based on
Value Analysis/Value Engineering
➢Decision for adding/Deleting suppliers are
taken due to Value Analysis
 Supplier Certification
➢ Approval from Quality Control & Quality
Assurance to be done for certifying
Supplier
➢ Various Conditions and Legalities
involved during certification process
➢ Suppliers to adhere to the said norms
➢ Periodic Audit undertaken to check any
malpractices
 Summary
➢Business Decisions are taken by
conducting Value Engineering/Value
Analysis
➢Make/Buy or Make-Buy decisions based
on various parameters
➢Supplier Scheduling based on Strategic
Locations
➢Certification of Suppliers is a must for
avoiding any mishaps in long run
Supply Chain Management

Session 9
SCM Business Strategy
 Learning Objectives
➢Co-ordination/Interaction/Feedback.
➢ABC Analysis.
➢Vendor Auditing and Rating.
➢Measurement of Vendors.
➢Structural Importance – CROSS
DOCKING.
➢Summary.
 Co-ordination/Interaction/
Feedback
➢Co-ordinate between Materials Function,
Logistics Function & Supply Chain
Management Function
➢Interaction with Integration of Resources
to avoid Surprises
➢Feed back from plant locations to
Centralized Purchase function using IT
platform
 ABC Analysis
➢Adequate Quality, Prompt Deliveries &
Favorable Vendor Relations
➢ABC Analysis Involves how much to store
for Critical items where lead time is more
➢ABC Analysis also helps SCM Managers
to work out cost allocations for Inventory
Management
➢ABC Analysis guides Finance department
for resource/fund allocation
 Vendor Auditing/Rating
➢To avoid sub standard products Vendor
has to be audited by Commercial &
Technical Team
➢Vendor registration form has to be filled
➢All relevant norms like facilities, machinery
Equipments, Promoters background, Site
Location, Cleanliness along with Plant visit
& Financial Analysis of the Vendor
 Measurement Of Vendors

➢Reputation of Vendor
➢Buyer should ask list of major customers
where the vendor is perusing Business
➢Ethical Standards & delivery Promises
➢Technological Competency along with the
desire to invest for Good Manufacturing
Practices
 Structural Importance-
Cross Docking
➢It is an Innovation in transportation System
➢Suppliers Shipments are taken fro various
docks at the Warehouse when they arrive
& are later transferred from truck to
another dock
➢Provides economy of full truck load
shipments which also reduces ware house
Inventory
 Summary
➢No appointment of Vendor to be done with
out Auditing
➢Reputation of Vendor is a must
➢ABC Analysis helps Supply Chain
Managers to take quick Decisions
➢Cross Docking helps to minimize Ware
house Inventory
Supply Chain Management

Session 10
Best SCM Practices to Improve
Supply Chain Process.
 Learning Objectives
➢15 Steps to transform Purchase Into
Strategic Sourcing
 15 Steps
➢ Develop Plan of Action to integrate Individual
Purchasing Units
➢ Understand different Business & Corporate
Cultures
➢ Identify External & Internal factors that could
work the efforts
➢ Determine Annual Spending by way of Budget
➢ Ascertain Percentage spend under Strategic
Sourcing
➢ Calculate Saving Potential through Development
of New Procurement Organization
 Cont:
➢Establish Personal & Team Credibility
➢Survey all Existing Procurement Related
Systems
➢Create a Business Case
➢Develop a Strategic Vision Statement &
Schedule
➢Evaluate Existing Procurement Staffing
Skills
➢Enumerate Role of A Supplier
 Cont:
➢Involvement Of Senior Management
➢Implementation Of Strategic Plan
➢Formulating Metrics to track results
achieved by the new Procurement
Organization
Supply Chain Management

Session 11
5 – S Tools for SCM
 Learning Objectives
➢Lean Supply Strategies
➢5 S Tools
➢Summary.
 Lean Supply Strategies
➢Lean Supply implies Supply Chain is
appropriate for lean production which is
nothing but Waste elimination in Process

➢Introduction of the Concept Of Lean

Supply & 5 S is helpful in measuring the
rejections at a given point
5 S 5 S’s are lean concepts derived
from Japanese Words like
Seiri (Sort)
Seiton ( Set In Order)
Seiso ( Shine or Purity)
Seiketsu(Standardize)
Shitsuke (Sustain)
 5 “S”
➢ Sort: Remove all but the necessary
Materials, Equipment & Supplies
➢ Set In Order: Arrange Product &
Equipment so it is easy to
find & easy to use in the
Context of Supply Chain
➢ Shine: Keep Everything Clean
➢ Standardize: Integrate first three “S”
➢ Sustain: Discipline Starts with the Leadership
 Summary
➢Treat Suppliers as Points of Flexibility
➢Evaluate Internal Processes & Structures
➢Eliminate Communication Gap
➢Give Importance on monitoring Supplier
Events
➢Benefits by way of Cost, Time & Quality
Supply Chain Management

Session 12
Role Of IT in SCM
 Learning Objectives
➢Importance of IT systems for
SCM
➢Effective time and Cost Management.
➢IT Diagram and its connectivity.
➢Summary.
 Importance Of IT Systems
in SCM
➢Effective Information Technology helps
firm to ensure meeting the needs of the
Customers
➢Helps in Vendor Management, Sales
Forecasting, Customer Services for
Decision Support Systems
➢Order Processing System is the nerve
Centre Of SCM which is supported by IT
 Effective Time & Cost
Management
➢Consolidation Of Spending
➢Order what is required & understand the
Re-Order Level using JIT Principle
➢IT helps to establish a comprehensive
Supplier Management Program
➢IT helps to track on line Status of the
Entire Logistics, Distribution &
Transportation
 IT Diagram &
Its Connectivity
A Complete Diagram to be drawn with
Explanation
 Summary
➢IT has created a platform to streamline
SCM activities
➢IT helps for Decision Support Systems
➢IT gives an landmark to avoid
overspending
➢IT helps for stocking what is required &
helps Re-Order Level
Supply Chain Management

Session 13
Six Elements of Superior
Design of SCM
 Learning Objectives
➢Global Supply Chain Management
➢Summary
 Global Supply Chain
Management
➢ Wrong Decision in SCM can result in huge loss
on Global front
➢ A simplified description of Five Stage Segments
of Organizational Performance :
a) Business Situation
b) Business Strategy
c) Design Elements
d) Culture
e) Business Results
 Business Situation

➢Environmental Scanning Of Business

Goals, Competitive Positioning, Employee,
Suppliers & Share holders
➢Understanding & Defining the gap
➢Proper Assessment for the future
➢Focusing on what is required
 Business Strategy

➢Choice that determine how company

resources interact with the Market
➢What and Where to Manufacture
➢Pears Soap World wide is manufacturing
base is India
➢Cost effectiveness, Strategic Supplier
Identification & Business Partner
Relationship is key differentiating factor
 Design Element

➢Understanding the Design Process

➢Ensure Holistic Thinking
➢Important elements are tasks, People,
Information, Decision Making, Rewards
and Structure
➢Helps Organizations take quick & Effective
Decisions
 Culture
➢How to Shape Vision & Mission Statement
➢Operational Behavior play important role in
shaping the future of the Organization
➢Certain Companies Award businesses
only to low bidder as their culture is price
driven
➢Certain Companies give thrust on
innovation & pay high price to the Supplier
 Business Results
➢The most important avenue is Bottom line
➢Out put of the Organization can be
measured on the basis of Cost, Market
Share, Profits, Sales & Innovation
➢Constantly Changing Business
Environment demands the Organizations
to recreate Continuously
 Summary
➢Organization to take a Holistic View
➢Construct new dimensions of Business to
grow
➢Deliver what the Market wants & Change
to the required level of Operations
➢Constantly view & Review Business
Models & Change according to the
circumstances
Supply Chain Management

Session 14
Importance of Logistics,
Distribution and Transportation
 Learning Objectives

➢Role of Logistics.
➢Role of Distribution.
➢Role of Transportation.
➢Internal Logistics & Distribution along
with IT.
➢Summary.
 Role Of Logistics
➢Logistics involves Integration Of
Information, Transportation, Inventory,
Ware housing, Material Handling &
Packaging
➢Operational Responsibility is geographical
positioning of Raw-Materials, WIP & FG
where required at the lowest possible Cost
 Role Of Distribution
➢Efficient Movement of Finished Products
from end of prediction line to the consumer
➢Activities undertaken in the execution of
physical distribution of goods to the end
user
➢Acts as a link between the end to end
users
 Role Of Transportation
➢It involves two major functions like
a) Physical Movement of Products
b) Product Storage

➢Main Aim Of transport Principle is

Economy of Scale & Economy of
distance
 Internal Logistics &
Distribution along with IT
➢Internal Logistics & Distribution are well
connected for proper flow of Information
➢Helps Decision Making faster
➢Create Platform for Effective
Transportation
➢Avoid Communication Gap
 Summary
➢Distribution, Logistics & Transportation are
the pillars of Supply Chain Management

➢To strengthen the Scope of Supply Chain

Management IT related Systems can act
as spinal Cord for Tracking
Supply Chain Management

Session 15
Role of SCM in Revenue
Management
 Learning Objectives

➢Re-order Level Analysis

➢Safety Stock Analysis.
➢J.I.T. along with Quality.
➢Time and Revenue Management.
➢Summary.
 Re-Order Level Analysis
➢Control is Provided by Continuous
Monitoring of Inventory Withdrawals
& Inventory Levels

➢ Economic Order Quantity is Justified on

the basis of Stock Movement, Market
Demand & Buffer Stocks
 Safety Stock Analysis
➢Safe Guard Stock out Situations when
demand is uncertain
➢Re-Order Level, Economic Order Quantity,
Safety Stock & Stock Out Situation is the
Key Differentiating Factor of Supply Chain
Manager
➢Hold Reserve Stock Level as cushioning
 J.I.T. along with Quality
➢Inventory Accuracy can be Managed using
JIT Principle
➢Marrying with the Vendors can help
Supply Chain Managers to rely upon for
JIT along with Superior Quality
➢Quality Up gradation can be thought over
as suppliers treat them as Partners in
Progress
 Time & Revenue
Management
➢Goods are made available on time by
avoiding delay in Shipments with desired
Quality
➢Cash Flow can be maintained by
implementing stringent norms right at the
grass root levels to avoid Overdraft
➢Accounts & Finance Should guide the
SCM team for managing resources under
strict Supervision
 Summary
➢Avoid Stock Out Situations
➢Create Business Partner Relationship
➢Focus on Stringent Quality & delivery
norms
➢Stress upon Safety Stocks for Critical
Inputs
➢Manage Cash Flow to avoid Overdraft
Supply Chain Management

Session 16
CASE STUDIES