Professional Documents
Culture Documents
Dr S G Deshmukh
Good resource books on SCM…
http://sheffi.mit.edu/sites/default/files/SCMOpe
rations-10greatSCMbooks.pdf
Plan of 4 Sessions
• SCM-Basics
• SCM-Strategy
• Performance Measurement
• Other issues
Outline of this session …
• Background
• Basics of SCM
• Typical issues in SCM
• Closing Remarks
Traditional Planning Approach
Characterized by Sequential, Decomposed, Slow
C
U
S
T
O
M
E
R
• Internally focused
• Local Optimization was the king—little emphasis on
Collaboration
• Growth and overall profitability compromised by local
cost reduction
• Reactive rather than proactive
C
U
S
Supply Chain Approach T
O
M
E
R
S
Sales
S
U
P Distribution
P
L
I
E
Manufacturing
R
S
Purchasing
Supply
Inventory &
warehousing
costs
Production/
purchase Transportation Transportation
costs costs costs
Inventory &
warehousing
costs
Most Supply Chains consist of many “threads”
which make up a network, or “chain of chains”
SOU
RCE
MAK
E
DEL
IVER
Multiple Production
Operations within a
Multiple Suppliers Business Multiple Customers
Observation..
• A Supply Chain (SC) includes all the participants and
processes involved in
the satisfaction of customer demand:
transportation, storages, retailers, wholesalers,
distributors and manufacturers.
• Global competition
• Well informed more powerful Customers &
Enhanced Customer Expectations
• Shorter product life cycle aided by technology
• New, low-cost distribution channels
• Internet and E-Business strategies
Flows in a Supply Chain
Information
Product
Funds
Supplier Customer
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Example of a Typical Supply Chain: IBM Europe PC Supply Chain
Warehouse
Port
PC Assembly
Plant Retailers
17
Supply Chain
Objective
To minimize system wide
costs while satisfying service
level requirements
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Challenges in supply chain
What is the difficulty in managing
supply chain ?
19
Dependency in Supply Chain
Output of Microsoft
Output of Seagate becomes Input to
becomes Input to Warehouses
Microsoft and Sony
S Microsoft
U
P
P
L
I
E
R Sony
S Seagate
S Microsoft
U
P
P
L
I
E
R Sony
S Seagate
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Consideration of all entities to meet supply
chain objectives
23
Supply chain facilities dispersed all over
the globe- National Semiconductor
More than 20000 different routes
More than 12 different airlines carriers
25
Uncertainty/ Risk is inherent in Supply
Chain
• Supply chain dynamics
– Customer demand
– Supplier capabilities
– Supply chain relationships
– Dominance changes
• System variations over time
– Seasonal fluctuations
– Advertising and promotions
– Competitor’s pricing strategies
– Cost parameters
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Drivers of supply chain
• Facilities
• Inventory
• Transportation
• Information
• Sourcing
• Pricing
27
Drivers of supply chain
• Facilities
• Inventory
• Transportation
• Information
• Sourcing
• Pricing
28
Facilities
‘From’ ‘To’
Inventory is stored
Inventory is assembled
Inventory is fabricated
30
Drivers of supply chain
• Facilities
• Inventory
• Transportation
• Information
• Sourcing
• Pricing
31
Why to hold inventory?
Buffer
for
in smoot
r
e n
a
t d produ h
c ction
Un ema
d
s po ns e
e
Longer Quick r mer
t o
Production runs t o c u s
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Transportation: Role in the Supply Chain
Fast or slow
transportation
mode Distance to
be covered
Quantity to
be shipped
Route to be
Number of
selected
facilities to
serve
Drivers of supply chain
• Facilities
• Inventory
• Transportation
• Information
• Sourcing
• Pricing Connection between the various stages in
the supply chain
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Sourcing:
Role in the Supply Chain
• Set of business processes required to purchase
goods and services in a supply chain
• Supplier selection, single vs. multiple
suppliers, contract negotiation
Drivers of supply chain
• Facilities
• Inventory
• Transportation
• Information
• Sourcing
• Pricing
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Pricing:
Role in the Supply Chain
• Pricing determines the amount to charge
customers in a supply chain
• Pricing strategies can be used to match
demand and supply
Components of Pricing Decisions
• Pricing and economies of scale
• Everyday low pricing versus high-low pricing
• Fixed price versus menu pricing
• Overall trade-off: Increase the firm profits Vs
limited assets
All the drivers drive the supply chain based on
the Business or supply chain strategy
Competitive Strategy
Supply Chain
Strategy
Efficiency Responsiveness
Supply chain structure
Logistical Drivers
• Supply chain strategy or design decides what the chain’s configuration will be and
what processes each stage will perform
• Strategic decisions made by companies include
Erroneous forecasts
Late deliveries
Poor quality
Canceled orders
Erroneous information
Problems in Transportation network
Impact of government policies
Measuring Supply Chain Performance
• Delivery—on time.
• Quality—customer satisfaction & loyalty
• Time
– Total replenishment time
– Cash to cash time
• Cost
– Total delivered cost
– Value added efficiency
• Others—e.g. inventory turns
Supply Chain Performance Drivers
1.Quality
2.Cost
3.Flexibility
4.Velocity
5.Customer service
Velocity
• Inventory velocity
– The rate at which inventory(material) goes through the
supply chain
• Information velocity
– The rate at which information is communicated in a
supply chain
Select Examples of SC in India
Type of Industry Select Examples
Customer
Customer
Demand
Demand
Retailer
RetailerOrders
Orders
Distributor
Distributor Orders
Orders
Production
ProductionPlan
Plan
Time
Bullwhip Effect
The bullwhip effect is a phenomenon observed in
supply chains wherein the demand variability
increases as one moves upstream from retailers
to distributors to manufacturers
Retailers
Warehouses/
Distributors
Manufacturers
The Bullwhip Effect describes the phenomenon in which order
variability is amplified as it moves up the supply chain from end-
consumers through distribution and manufacturing to raw material
suppliers
Wild swings in orders due to lack of coordination and
trust among supply chain members
Example
Inadequate Forecasting
Order batch sizing
Price fluctuation
Rationing and shortages
No information sharing
Remedial measures to counteract bullwhip
effect..
Freight
Materials Management
Management
Supply
Chain of
IR
Customer Care IT Initiatives
Management
New Initiatives
Materials management
Stocking Depots
In order to ensure uninterrupted supply of materials, Zonal
Railways and Production Units run 200 Stocking Depots over the
railway network. These Depots stock over 1.8 lakh materials
components of various descriptions.
• Disposal of Unserviceable Items
Creation of revenues through disposal of surplus and obsolete
items and industrial wastes. During 2006-07, the total value
realised through disposal of various unserviceable items was
Rs.1,832 crore.
• Procurement of Iron & Steel Materials
IR’s requirement of iron & steel materials is met indigenously.
• Agencies for Procurement
Zonal Railways and Production Units procure most of the materials.
They need on their own but for purchase of some items. Certain
purchases are reserved for procurement through the Director
General of Supplies and Disposals (DGS&D). Some items through
Small Scale Sector and KVIC.
Supply Chain of International Freight movement
Customs
Freight forwarding
agents of companies
Financial Institutes like MAERSK
(International
Banks and 3PL provider
Insurance
companies)
Customer
Profile of CONCOR
• 20/40 ft High Cube containers These containers offer the added advantage of
extra volumetric capacity due to their additional height, and are especially
useful of movement of light but bulky cargo.
Functionalities Covered
All export / import functionalities have been covered as mentioned below:
• Imports
1. Book Delivery of Containers
2. Filing of Request for Customs Examination Job-order
3. Generation of Gate Pass for Cargo/Container Removal
• Exports
1. Filing of CFN (Cargo Forwarding Note)
2. Export Container Booking
3. Empty / Loaded Container Arrival / Departure Permits
4. Leasing of Empty Containers between Shipping Lines
• Billing
Customer billing takes place at all the stages automatically and the amount gets debited from his pre-
deposit amount being maintained in the system.
• Queries / Reports
Various Queries and Reports have been provided to keep track of containers at every stage and also to
find out due amount to be paid to CONCOR.
• Net Banking Module
Any customer can credit his Pre-Deposit Account, operational in our CCLS system from any of the
major banks directly. The customer logs in to the system and selects one of the banks where his
account is and the amount he wants to transfer. On this, concerned bank’s Internet Banking site gets
activated, through which debit transaction takes place and instant credit information is passed to
CONCOR in a secured way.
New Initiatives
Visit me www.slideshare.net/SanjeevDeshmukh/
THANK YOU
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