FLOW OF PRESENTATION

• INTRODUCTION OF SCM
• SCM MYTH
• THE EVOLVING STRUCTURE OF SUPPLY CHAIN
• SUPPLY CHAIN PROCESS
• PARTICIPANTS IN SUPPLY CHAIN
• SCM STRUCTURE
• COMPONENTS OF SCM
• ADVANTAGES OF SCM
• PHARMACEUTICAL SCM - SANDOZ

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WHAT IS SCM ?
Supply chain management is the
coordination of production, inventory,
location, and transportation among the
participants in a supply chain to achieve
the best mix of responsiveness and
efficiency for the market being served.
THE DEFINITION
“The systemic, strategic coordination of the traditional business
functions and the tactics across these business functions within a
particular company and across businesses within the supply chain,
for the purposes of improving the long-term performance of the
individual companies and the supply chain as a whole.”
—from Mentzer, DeWitt, Deebler, Min, Nix, Smith, and Zacharia in their
article Defining Supply Chain Management in the Journal of Business Logistics (Mentzer, John T.,William
DeWitt, James S. Keebler, Soonhong Min, Nancy W. Nix, Carlo D. Smith, and Zach G. Zacharia, 2001, 3
“Defining Supply Chain Management,” Journal of Business Logistics,Vol. 22, No. 2, p. 18)
THE SCM MYTH
SCM same as Logistics
TWO major differences between Logistics & SCM:

LOGISTICS SUPPLY CHAIN MANAGEMENT

 Activities that occur within the  Networks of companies that work

boundaries of a single organization together and coordinate their actions to
deliver a product to market

 Acknowledges all of traditional

 Focuses on activities such as
logistics + includes activities such as
procurement, distribution, maintenance,
marketing, new product development,
and inventory management
finance, and customer service

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 THE EVOLVING STRUCTURE OF SUPPLY CHAINS
Old Supply Chains versus New :

FORD motors (For eg.) in 1900

followed the Old Supply chain
approach called the Vertically
integrated supply chains.

But as the markets grew and

customers became more
articular about the kind of
products they wanted, this
model began to break down

Instead of vertical integration,

companies now practice
“Virtual Integration.”
Companies find other
companies who they can work
with to perform the activities
called for in their supply
chains. 5
DECISION MAKING IN SCM

 PRODUCTION

 INVENTORY

 LOCATION


TRANSPORTATION

INFORMATION
RESPONSIVENESS
V\S
EFFICIENCY
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 COMPONENTS OF SCM

 Plan  development,
monitoring…
 Source  suppliers…

 Make  produce, test, package,

quality
level, output…
 Delivery  product to customers,
network with service
providers
 Return  customers return …

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 PARTICIPANTS IN THE SUPPLY CHAIN
• A simple supply chain is composed of
–
– A company
– The Suppliers
– The Customers
• Extended SCM contains 3 more
participants
– Supplier’s supplier
– Customer’s customer
– Service Providers
Ultimate Supplier  Producers

Suppliers  Distributors

A Company

Customer  Retailer

Ultimate Customer  Consumer 8

SCM STRUCTURE

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 CHALLENGES

 Reduced Cost  Distribution Strategy

-Operating Control
 Increases Efficiency - Mode of transport

 Increases Output  Inventory

Management
 Responsiveness to Demand  Cash Flow

 Optimized Stock Levels  Information

 Accurate Costing &

Scheduling
 Quality Advantage

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 PHARMACEUTICAL - SCM
DEPARTMENTS INVOLVED

• PLANNING
• PURCHASE
• CUSTOMER SERVICE
• WAREHOUSING
• PACKAGING AND
DEVELOPMENT
• LOGISTICS

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 CUSTOMER SERVICE

• Forecasting/demand planning
• New product launches

PLANNING
• Forecast planning
• Material procurement planning
• Production planning
• Dispatch planning

PURCHASE
• Purchase of raw materials and
packaging material and
expeicients…
• Import clearance 13
 PACKAGING AND DEVELOPMENT

• Blister pack
• Bottle pack( Plastic/Glass)
• Alualu pack
• Bulk pack

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 WAREHOUSING

• Receipts
• Issues
• Dispatches: Data logger, tyveck cover,
Pallets
• Inventory management

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 LOGISTICS

• Customs clearance
• Excise clearance
• Octroi clearance
• Negotiations with airlines,
transporters, freight forwarders,

VENDORMANAGEMENT INVENTORY
• A means of optimizing Supply Chain performance in which the manufacturer is
responsible for maintaining the distributor’s inventory levels. The manufacturer
has access to the distributor’s inventory data and is responsible for generating
purchase orders
• Under the typical business model: When a distributor needs product, they place
an order against a manufacturer. The distributor is in total control of the timing
and size of the order being placed. The distributor maintains the inventory plan.
• Vendor Managed Inventory model: The manufacturer receives electronic data
that tells him the distributor’s sales and stock levels. The manufacturer can view
every item that the distributor carriers as well as true point of sale data. 16The
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