SCM & GLOBAL LOGISTICS

TECHNOLOGIAL CHANGE
Many changes have taken place in SCM practices in last 15
to 20 years, due to advancement of Technology, such as:
 Placing of orders electronically(E mail, What’s app etc)
 Preparation of Retail Invoices, billing using bar codes
 On line records of type of stocks, inventory
 Inward receipts and counts by way of Bar coding
 Outward billing & counts by way of Bar coding
 Direct linking of Supplier system to Inventory
 ERP Packages and BI Tools(GSK billing, collection &
Receivables model & SMS)
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ETHICAL & ENVIRONMENTAL ISSUES
Environments refer to various conditions like :
 Political
 Economical
 Regulatory
 Social
 Cultural
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POLITICAL
Political system greatly affects the supply Chain and Logistics
management in various different ways.
1) Suppliers and receivers are located in different countries
2) Suppliers and receivers are located in different states
within the country
3) Suppliers and receivers are located in different Districts
4) Suppliers and receivers are located in different villages or
towns
In all such cases if the political parties in two locations are
from different ideology, problems/Frictions exist and
must be dealt properly
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ECONOMICAL
Similarly Economic conditions, rules and regulations may be
different at different locations such as :
 Local taxes
 Tariffs & Duties
 Availability of Capital
 Interest Rates
 Ease and availability of Transportation network
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RGULATORY FRAMEWORK
Regulatory Framework generally refers to :
 Laws related to pollution
 Laws related to disposal of waste products
 Rules and Regulations about working conditions
 Laws related to Transportation
 Laws related to taxation
 Laws related to use of natural resources like land , water
etc
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SOCIAL & CULTURAL
Social and cultural environments differ greatly from country
to country, states, districts, towns and villages etc
In India, there is a saying that even language changes after
every few kilometres
Work environment, days and timings also vary

In addition, there are numerous variations in culture, which

affect the working of Supply chain management
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SUPPLY CHAIN FUNCTIONS
Functions of Supply chain are wide and varied depending on
the nature of business
A supply chain manager has to mange various tasks on both
sides that is back end and front end of supply chain
Management of both sides is totally different and requires
different resources and skill sets.
This is mostly due to different type of relationship with
channel partners depending on the status of the company
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MANAGING BACK END
Back end usually refers to those channel partners, who supply
materials and services to a company necessary to complete its
production of items, before dispatching the finished goods
Major issues/concerns are :
• Ensure supply of correct and reliable parts, items & services
• Supplies must be received in time, to facilitate production
• Keep the inventory levels to a minimum (JIT)
• Availability of sufficient credit
• A robust and reliable network of suppliers
• Back up facility or alternatives in case of problems
• Regular and continuous communication
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ECONOMIC ORDER QUANTITY
The basic purpose of SCM is to maintain sufficient stocks,
while reducing inventory costs.
EOQ is that quantity which shall ensure the above, and must
be placed when inventory levels reach a certain minimum
point

There are various formulas to determine EOQ, based on the

requirements and each reputed company has its own
algorithm to determine EOQ
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MANAGING FRONT END
Front end refers to the channel partners handling finished
goods like Wholesalers, Main and sub distributors, Retailers
etc
Major concerns are :
 Sufficient stock in the network to avoid “Stock-out”
situations
 Efficient movement of goods and services
 Reliability to project company’s image
 Advance payment or minimum credit
 Capacity to handle end customer problems/issues
 Efficient “Demand Forecasting” capability
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DEMAND FORECASTING
This is one of the most important part of SCM, as it affects
the planning of production and overall profitability.
Demand forecasting is done using various simple to complex
methods, depending on the type of industry, customer
profiles, company’s status etc
Some companies do it in-house but there are big companies
who have separate departments or hire agencies for this
sole purpose.
Some of the methods are:
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DEMAND FORECASTING
a. Historical data plus percentage growth
b. Moving average and projections
c. Historical data suitably adjusted to other economic
parameters like interest rates, GDP, GDP Growth
projections etc
d. A combination of above adjusted to local conditions like
festivals etc
e. Algorithms developed after doing detailed market
research
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ETHICAL ISSUES
SCM & GLOBAL LOGISTICS