7 PRINCIPLES OF SUPPLY CHAIN

MANAGEMENT

Rolls No:21, 22, 23 and 25

Index
 What is Supply Chain Management
 Supply Chain Activities
 7 Principle of SCM
 Detailed study
 Differentiate product closer to the customer.
 Source strategically.
 Develop a supply chain wide technology strategy.
 Adopt channel-spanning performance measures.
What is Supply Chain Management ?

 Supply chain management refer to the art of

managing the flow of materials and products from
source to user.
Supply Chain Activities
 Sourcing and Purchasing
 Conversion (manufacturing)
 Capacity planning, technology solution, operations
management, production scheduling, and materials
planning (MRP II)
 Distribution planning and management industry
warehouse operation
 Inventory management and inbound and outbound
transportation
 Linkage with the customer service, sales, promotion,
and marketing activities.
7 Principle of SCM

1. Segment customers based on service needs.

2. Customize the logistics network.
3. Listen to signals of market demand and plan
accordingly.
4. Differentiate product closer to the customer.
5. Source strategically.
6. Develop a supply chainwide technology strategy.
7. Adopt channel-spanning performance measures.
4: Differentiate product closer to the customer and speed conversion

across the supply chain.

 Delaying product differentiation to the last possible moment

 Packaging the products at the distribution center, within the customer
order cycle .
 Strengthening their ability to react to market signals by compressing the
lead time.
 Speeding the conversion from raw materials to finished products tailored
to customer requirements
-
5: Manage sources of supply strategically to reduce the total cost of

owning materials and services.

 manufacturers and suppliers must share the goal of reducing costs across
the supply chain in order to lower prices in the marketplace and enhance
margins
 sound knowledge of all their commodity costs, not only for direct
materials but also for maintenance, repair, and operating supplies, plus
the dollars spent on utilities, travel, temps, and virtually everything else.
 tackling the volatility of base commodity prices by indexing them
Indexed Pricing
6: Develop a supply chain-wide technology strategy that support multiple level of
decision making and gives a clear view of the products, services and information


Use of Enterprise-wide systems
 IT systems which incorporates short term, mid term and long term Supply
chain Activities
 manufacturers are now implementing "real-time" information technology
to gain store-specific performance data.
7: Adopt channel-spanning performance measures to gauge collective success in
reaching the end user effectively and efficiently

 Supply chain managers take a broader view, adopting measures that apply
to every link in the supply chain and include both service and financial
metrics.
 Determine their true profitability of service by identifying the actual costs
and revenues of the activities required to serve an account.

Performance measurement through common report cards.
Thank You