MODULE 01 CLASS 01

INTRODUCTION TO SCM
Prepared & Delivered by:
Prof. Vinayaka G.P
Assistant Professor, Mechanical Engineering Department
Vidyavardhaka College of Engineering, Mysuru
UNDERSTANDING THE
SUPPLY CHAIN
 Scenario1:
 Consider a customer walking into MORE SUPERSTORE to purchase a Hand Sanitizer.

The supply chain begins with CUSTOMER, and his need for the sanitizer. The next stage of the supply chain
is the RETAIL STORE (More Supermarket )that the customer visits. The Retail store stocks its shelves from
the INVENTORY that is supplied from a finished goods WAREHOUSE or a DISTRIBUTOR using
LOGISTICS (trucks/airways/railways) supplied by a third party. The distributor is in turn stocked by the
MANUFACTURER (say Himalaya Groups in this case). The manufacturer receives RAW MATERIAL from
variety of SUPPLIERS for packaging, plastic containers, chemical ingredients etc. This SUPPLY CHAIN is
illustrated with the arrows corresponding to the direction of the physical product flow.
Himalaya Group
LOGISTICS Distributor LOGISTICS Warehouse
(Manufacturer)

LOGISTICS

More Customer (with

Supermarket a need for
(Retailer) Sanitizer)

Figure: Representation of Stages of Hand Sanitizer Supply Chain

 UNDERSTANDING THE
SUPPLY CHAIN
 From scenario 1 its understood that Supply Chain involves all the stakeholders directly or indirectly

involved in fulfilling the customers request.

 It includes manufacturers, suppliers along with retailers/distributors, transporters (logistic groups),

warehouses and even customer themselves.

 Within each firm, such as manufacturer, retailer etc. supply chain includes all functions of receiving and

fulfilling a customer request. These functions may include NPD, marketing, manufacturing processes,
finance etc.
 UNDERSTANDING THE
SUPPLY CHAIN
 Supply chain is dynamic and involves constant flow of information, product and funds between different stages.

 In scenario 1, More super market provides the product, pricing and availability information to the customer.

Customer on purchase shall transfer the fund to super market.

 Retailer shall convey sales data and replenishment orders to warehouse or distributor, packaging material for

recycle, transfer funds to distributor, distributor sends delivery schedules, stock information and price to retailer.

 Manufacturer shares information on inventory stocks, sales forecast with distributor and other stakeholders.
 UNDERSTANDING THE
SUPPLY CHAIN
 Scenario 2

 Consider purchasing a DELL laptop from their online store. The supply chain here includes,

CUSTOMER, the ONLINE DELL WEBSSTORE, Dell’s ASSEMBLY PLANT, its RAW MATERIAL
SUPPLIERS and its SUB-SUPPLIERS.
 Dell website provides information regarding pricing, product variety, pricing. Product availability.

Based on the need, customers places the order and pays for it. Stages further up the supply chain uses
customer orders to fulfil the request.
 This involves the flow of information, funds and products among various stages of supply chain.
UNDERSTANDING THE
SUPPLY CHAIN
 The supply chain not only includes manufacturers, suppliers and
distributors but also transporters, warehouses and customers
themselves.
 Customer is an integral part of the supply chain. In fact, the
primary purpose of any supply chain is to satisfy customer needs
and, in the process, generate profit for itself.
 Term ‘supply chain’ conjures up images of product or service
moving from suppliers to manufacturers to distributors to
retailers to customers along a chain.
A typical Supply Network may
involve a variety of stages, including
the following:
 Customers

 Retailers

 Wholesalers/Distributors

 Manufacturers

 Component/Raw material
Suppliers.
  The supply chains of companies dealing with consumer durables

SUPPLY will be very similar to the one depicted in the figure. While,
companies in the consumer non-­durables business have to work

NETWO with supply chains that are likely to be much longer and more
complex.

RK OR  Term ‘chain’ is a little misleading because it gives the impression

that there is only one entity at each stage of the supply chain. In

SUPPLY reality, multiple entities are involved at each stage:

 a manufacturer receives material from several suppliers and, in turn,

WEB distributes the products through multiple distributors. The more

appropriate term probably will be either supply networks or supply
web
Harry Potter and the Deathly Hallows, the much-awaited
seventh and final book in the Harry Potter series of novels, was
released in 93 countries simultaneously on 21 July 2007.
LAUNCH
Managing a launch of this magnitude is a supply chain nightmare. OF THE 7TH
Ensuring that the book is available in sufficient quantity at tens of
thousands of outlets across 93 countries across the globe poses HARRY
substantial challenges to supply chain managers, who have also to
ensure that the content of books is not leaked out before the launch POTTER
date.
BOOK !
The books had to reach the stores just in time for the launch,
neither too early nor too late. Penguin India, the distributor of
Harry Potter books in India, had to manage the seemingly
impossible task of delivering the books simultaneously to 300
destinations just a few hours prior to the launch time of 6:30 a.m.