Supply Chain Management Final | Supply Chain Management | Supply Chain

Project Report

SUPPLY CHAIN MANAGEMENT

Under the guidance of Prof.Ruchi Sharma

Submitted by:
Shruti Agarwal(131) Manjot Singh(133) Akashdeep Mohanty(132) Aniket Das(271)

Supply chain management
Various definations of Supply Chain Management (SCM) has been given by prominent persons and organizations in the world . Let us look on some of them Supply chain management (SCM) is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers (Harland, 1996) APICS Dictionary defines SCM as the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally." Supply chain management is the integration of key business processes across the supply chain for the purpose of creating value for customers and stakeholders (Lambert, 2008). In simple terms Supply

chain management (SCM) is the viewing of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer.

As the diagram shows it is a continuous process - the producer even after selling its product goes for feedback which helps to improve the efficiency of supply chain management process .Similarly the consumer also search for information before buying the product. Every party at each step is involved in rigorous interaction.

Why supply chain management??
However effective a product may be but unless and untill its useful in practical life its worthless.The concept of SCM is no doubt very impressive and so is it’s applications. Let us look at some of the major functions of SCM: Distribution Network Configuration: number, location and network missions of suppliers, production facilities, distribution centers, warehouses, cross-docks and customers.  Distribution Strategy: questions of operating control (centralized, decentralized or shared); delivery scheme, e.g.,direct shipment , pool point shipping,cross docking, DSD (direct store delivery), closed loop shipping; mode of transportation, e.g.moto carrier, including truckload,LTL,parcel:railroad intermodal transport, including TOFC (trailer on flatcar) and COFC (container on flatcar); ocean freight; airfreight; replenishment strategy (e.g., pull, push or hybrid); and transportation control (e.g., owner-operated,private and common and contract carrier  Trade-Offs in Logistical Activities: The above activities must be well coordinated in order to achieve the lowest total logistics cost. Trade-offs may increase the total cost if only one of the activities is optimized. For example, full truckload (FTL) rates are more economical on a cost per pallet basis than less than truckload (LTL) shipments. If, however, a full truckload of a product is ordered to reduce transportation costs, there will be an increase in inventory holding costs which may increase total logistics costs. It is therefore imperative to take a systems approach when planning logistical activities. These trade-offs are key to developing the most efficient and effective Logistics and SCM strategy.  Information: Integration of processes through the supply chain to share valuable information, including demand signals, forecasts, inventory, transportation, potential collaboration, etc.  Inventory Management: Quantity and location of inventory, including raw materials, work-inprogress (WIP) and finished goods.  Cash-Flow: Arranging the payment terms and methodologies for exchanging funds across entities within the supply chain.

HOW THE SUPPLY CHAIN WORKS
Production:
Production refers to the capacity of a supply chain to make and store products. The facilities of production are factories and warehouses. The fundamental decision that managers face when making production decisions is how to resolve the trade-off between responsiveness and efficiency Factories can be built to accommodate one of two approaches to manufacturing: 1. Product focus—A factory that takes a product focus performs the range of different operations required to make a given product line from fabrication of different product parts to assembly of these parts 2. Functional focus—A functional approach concentrates on performing just a few operations such as only making a select group of parts or only doing assembly. These functions can be applied to making many different kinds of products. A product approach tends to result in developing expertise about a given set of products at the expense of expertise about any particular function. A functional approach results in expertise about particular functions instead of expertise in a given product Warehouses too can be built to accommodate different approaches. There are three main approaches to use in warehousing: 1. Stock keeping unit (SKU) storage—In this traditional approach, all of a given type of product is stored together. This is an efficient and easy to understand way to store products. 2. Job lot storage—In this approach, all the different products related to the needs of a certain type of customer or related to the needs of a particular job are stored together. This allows for an efficient picking and packing operation but usually requires more storage space than the traditional SKU storage approach 3. Cross docking—An approach that was pioneered by Wal-Mart in its drive to increase efficiencies in its supply chain. In this approach, product is not actually warehoused in the facility. Instead the facility is used to house a process where trucks from suppliers arrive and unload large quantities of different products. These large lots are then broken down into smaller lots. Smaller lots of different products are recombined according to the needs of the day and quickly loaded onto outbound trucks that deliver the products to their final destination

Inventory:
Inventory is spread throughout the supply chain and includes everything from raw material to work in process to finished goods that are held by the manufacturers, distributors, and retailers in a supply chain There are three basic decisions to make regarding the creation and holding of inventory: 1. Cycle Inventory—This is the amount of inventory needed to satisfy demand for the product in the period between purchases of the product. Companies tend to produce and to purchase in large lots in order to gain the advantages that economies of scale can bring.

2. Safety Inventory—Inventory that is held as a buffer against uncertainty. If demand forecasting could be done with perfect accuracy, then the only inventory that would be needed would be cycle inventory. But since every forecast has some degree of uncertainty in it, we cover that uncertainty to a greater or lesser degree by holding additional inventory in case demand is suddenly greater than anticipated 3. Seasonal Inventory—This is inventory that is built up in anticipation of predictable increases in demand that occur at certain times of the year

Location:
Location refers to the geographical setting of supply chain facilities. The responsiveness versus efficiency trade-off here is the decision whether to centralize activities in fewer locations to gain economies of scale and efficiency, or to decentralize activities in many locations close to customers and suppliers in order for operations to be more responsive. When making location decisions, managers need to consider a range of factors that relate to a given location including the cost of facilities, the cost of labor, skills available in the workforce, infrastructure conditions, taxes and tariffs, and proximity to suppliers and customers. Location decisions tend to be very strategic decisions because they commit large amounts of money to long-term plans. Location decisions have strong impacts on the cost and performance characteristics of a supply chain. Once the size, number, and location of facilities are determined, that also defines the number of possible paths through which products can flow on the way to the final customer. Location decisions reflect a company’s basic strategy for building and delivering its products to market.

Transportation:
This refers to the movement of everything from raw material to finished goods between different facilities in a supply chain. There are six basic modes of transport that a company can choose from: Ship, Rail, Pipelines, Trucks, Airplanes, Electronic Transport Information:It is the connection between all of the activities and operations in a supply chain 1. Coordinating daily activities related to the functioning of the other four supply chain drivers: production; inventory; location; and transportation 2. Forecasting and planning to anticipate and meet future demands. Available information is used to make tactical forecasts to guide the setting of monthly and quarterly production schedules and timetables

MIS and SCM
Before relating MIS and SCM. Let us just know what MIS is – MIS (Management Information System)- is a system that provides information needed to manage
organizations effectively. So clearly we could infer that MIS is all about managing information in a way that can be used for making decisions. In the modern business era there has been a trend among corporations to focus attention on supply chain management in order to cut costs. This is largely due to an increase in lower cost competitive products and services within a given industry. With such a high level of competition in the market, businesses are forced to cut as many corners as they can to ensure their products have a competitive pricing level while still maintaining consumer appeal. To make this task easier and more efficient, managers have been implementing their supply chain management strategies with MIS. This allows managers to focus on the firms daily operations while MIS monitors what is happening and recommends what should be done based on various facts and figures.

MIS
Scm at various functional levels
Strategic level

SCM

Strategic network optimization, including the number, location, and size of warehousing, distribution centers, and facilities.

Strategic partnerships with suppliers, distributors, and customers, creating communication channels for critical information and operational improvements such as cross docking, direct shipping, andthirdparty logistics.

Product life cycle management, so that new and existing products can be optimally integrated into the supply chain and capacity management activities.

   

Information technology chain operations. Where-to-make and make-buy decisions. Aligning overall organizational strategy with supply strategy. It is for long term and needs resource commitment.

Tactical level
     Sourcing contracts and other purchasing decisions. Production decisions, including contracting, scheduling, and planning process definition. Inventory decisions, including quantity, location, and quality of inventory. Transportation strategy, including frequency, routes, and contracting. Benchmarking of all operations against competitors and implementation of best practices throughout the enterprise.   Milestone payments. Focus on customer demand and Habits.

Operational level
   Daily production and distribution planning, including all nodes in the supply chain. Production scheduling for each manufacturing facility in the supply chain (minute by minute). Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the forecast with all suppliers.  Sourcing planning, including current inventory and forecast demand, in collaboration with all suppliers.     Inbound operations, including transportation from suppliers and receiving inventory. Production operations, including the consumption of materials and flow of finished goods. Outbound operations, including all fulfillment activities, warehousing and transportation to customers. Order promising, accounting for all constraints in the supply chain, including all suppliers, manufacturing facilities, distribution centers, and other customers.  From production level to supply level accounting all transit damage cases & arrange to settlement at customer level by maintaining company loss through insurance company.

THE EVOLVING STRUCTURE OF SUPPLY CHAINS
Participants in the Supply Chain: 1. Producers:
Producers or manufacturers are organizations that make a product. Producers can create products that are intangible or tangible.

2. Distributors:
Distributors are companies that take inventory in bulk from producers and deliver a bundle of related product lines to customers. Distributors are also known as wholesalers. For the customer, distributors fulfill the “Time and Place” function— they deliver products when and where the customer wants them. A distributor is typically an organization that takes ownership of significant inventories of products that they buy from producers and sell to consumers

3. Retailers:
Retailers stock inventory and sell in smaller quantities to the general public. This organization also closely tracks the preferences and demands of the customers that it sells to

4. Customers:
Customers or consumers are any organization that purchases and uses a product.

5. Service Providers:
These are organizations that provide services to producers, distributors, retailers, and customers. Some common service providers in any supply chain are providers of transportation services and warehousing services. Financial service providers deliver services such as making loans, doing credit analysis, and collecting on past due invoices.

SUPPLY CHAIN OPERATIONS
SCOR model of Supply Chain Operations: SCOR stands for supply chain operations research
This model identifies four categories of operations

1. Plan
This refers to all the operations needed to plan and organize the operations in the other three categories 2. Source Operations in this category include the activities necessary to acquire the inputs to create products or services. We will look at two operations here. The first,

procurement, is the acquisition of materials and services. The second operation, credit and collections, is not traditionally seen as a sourcing activity but it can be thought of as, literally, the acquisition of cash. 3. Make This category includes the operations required to develop and build the products and services that a supply chain provides. Operations are included in this category are: product design; production management; and facility and management.

4. Deliver
These operations encompass the activities that are part of receiving customer orders and delivering products to customers. The two main operations are order entry/order fulfillment and product delivery

Supply Chain Operations: Planning and Sourcing:
There are four main operations that constitute the Planning process: 1. Demand Forecasting 2. Aggregate Planning(purpose is to satisfy demand in a way that maximizes profit for the company) 3. Product Pricing 4. Inventory Management There are two main operations that constitute the Sourcing process: 1. Procurement:  Purchasing  Consumption Management  Vendor Selection  Contract Negotiation  Contract Management 2. Credit and Collections (company uses to get its money)

Supply Chain Operations: Making and Delivering:
Operations that constitute the Making process: 1. Product Design 2. Production Scheduling 3. Facility Management 4. Operations that constitute the Delivering process: 1. Order Management 2. Delivery Scheduling

DEVELOPING SUPPLY CHAIN SYSTEMS
After a company defines its supply chain strategy and sets the performance targets for the markets it serves, the next step is to develop the systems needed to implement the strategy. Often existing systems need to be enhanced and new systems need to be built.

Designing Supply Chain Systems:
The purpose of the design step is to flesh out the conceptual system design and create the detailed system specifications. This step also creates the detailed project plan and budget needed to build the system. By the end of the design step it is usually possible to predict the success or failure of the project The phase begins with the project leader reviewing the project goal, the conceptual system design, and the objectives with the project work group. The work group is composed of business and technical people who have the necessary mix of business and technical skills and experience needed to do the detailed system design. It is important for the people to understand senior management’s intentions and the project’s goal. Specific issues relating to the project objectives and budget can be investigated during this phase. If necessary, adjustments can be made in light of the findings that come out of this phase There are two main things that need to be done in the design phase: 1. Create detailed process flow diagrams for the new system; 2. Build and test the system prototype (i.e., the user interface and the technical architecture). Use the technique called “time boxing” to lay out a work schedule and get things done according to that schedule. Divvy up the time allotted to the total design step among the two major design activities. Break each activity into a set of tasks. Then give each task the time needed to do a competent job. Avoid the temptation to spend extra time doing excessive amounts of analysis and checking and re-checking the results that come out of each activity.

Supply Chain Process Mapping:
The project team should review the system performance criteria as described in the define phase. The criteria will be some mix of performance targets from the four categories: 1. Customer Service 2. Internal Efficiency 3. Demand Flexibility 4. Product Development

System Prototyping to Design New Systems
Once new process flows have been designed, system prototyping is a technique to use to design a new system that will effectively support these new processes. The process

decomposition diagrams provide the processing logic and sequences to be used and indicate the kinds and volumes of data that the new system needs to handle. There are two kinds of system prototypes:  user interface prototypes and  technical architecture prototypes

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The System Design Process Create the Detailed Project Plan Create the Detailed Project Budget The Decision to Proceed . . . or Not to Proceed The Project Office  System Test and Roll Out

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