SUPPLY CHAIN MANAGEMENT

BY: RAVI SETIA VIDIT GUPTA RAHUL KATHURIA

AMANDEEP CHAWLA SUMIT GUPTA RAHUL PASSI

 3rd largest manufacturer of construction and earth moving equipment. World s number 1 producer for backhoe loaders. Employs more than 8000 people over 4 continents. Over 300 products in 150 countries through 1500 dealers.

 Departments: Manufacturing TBU (Transmission Business Unit) ABU (Assembly Business Unit) FBU (Fabrication Business Unit) Paint Shop CMD (Central Materials Deptt.) Projects ME (Manufacturing Engineering)

CPD (Central Purchase Deptt.)

Product Support Marketing Finance

Products manufactured at JCB India

JCB 2DX JCB 3DX JCB 3DX SUPER JCB 4.8NA JCB 4DX JCB LIFTALL

WHAT IS SUPPLY CHAIN MANAGEMENT

" Is the strategic management of activities involved in the acquisition and conversion of materials to finished

products delivered to the customer"

Supplier Management

Material Flow Information Flow

Customer Management

Schedule / Resources

Conversion

Stock Deployment

Delivery

 Supply chain is the system by which organizations source, make and deliver their products or services according to market demand. Supply chain management operations and decisions are ultimately triggered by demand signals at the ultimate consumer level. Supply chain as defined by experienced practitioners extends from suppliers suppliers to customers customers.

SUPPLY CHAIN INCLUDES :

MATERIAL FLOWS INFORMATION FLOWS FINANCIAL FLOWS

 Supply chain objectives may differ from situation to situation. For functional products, cost efficiency is the critical factor. For innovative products, responsiveness is the important factor. Leanness + Agility together make up Leagility For JCB timely procurement and cost efficiency are the most important factors.

Supply Chain Structure

SUPPLIER FACTORY DC RDC RETAILER

Raw Materials Finished Goods

Information Flow

Supply Chain and Demand Chain

Demand chain is defined as the system by which organizations manage sales and distribution of products and services to end users. Conceptually incorrect to look at demand chain separately Demand is determined by the sales and marketing department at offices all over the world. The head office at JCB UK predicts the overall demand which is currently at 100 machines per day.

SUPPLY CHAIN ELEMENTS

Supply Chain Design Strategic Resource Acquisition Long Term Planning (1 Year ++)

Production/ Distribution Planning Tactical Resource Allocation Medium Term Planning (Qtrly,Monthly)

Shipment Scheduling Operational Resource Scheduling Short Term Planning (Weekly,Daily)

 Supply Chain Goals

Efficient supply chain management must result in tangible business improvements. It is characterized by a sharp focus on
Revenue growth Better asset utilization Cost reduction.

The steps involved

Step1- Designing the supply chain
Determine the supply chain network Identify the levels of service required Procurement from vendors all over the world(mostly India.). Value Addition(assembling the complete machine) Shipment to distributors all over the world.

S.No.

Part No.

Part Description

459/50509

1st Gear

459/50511

2nd Gear

459/50203

3rd Gear

332/Y4829

Lay Shaft

459/50205

Main Shaft

459/50207

Transfer Gear

459/50440

Idler Gear

459/50429

Gear 22T

459/50428

Gear 31T

Step 2 - Optimizing the supply chain Determine pathways from suppliers to the end customer
Customer markets to Distribution centers Distribution centers to production plants Raw material sources to production plants Identify constraints at vendors, plants and distribution centers Get the big picture Plan the procurement, production and distribution of product groups rather than individual products in large time periodsquarters or years

Step 3- Material flow planning

Determine the exact flow and timing of materials Arrive at decisions by working back from the projected demand through the supply chain to the raw material resources Techniques
ERP MRP MPS

S.No.

Part Number

Part Description 15-Jan 16-Jan 17-Jan 18-Jan 19-Jan 20-Jan 21-Jan 22-Jan 23-Jan 24-Jan

459/50509

1st GEAR

sch

35

35

35

35

35

35

35

Rev Sch

45

45

45

45

45

45

45

459/50511

2nd GEAR

sch

35

35

35

35

35

35

35

Rev Sch

45

45

45

45

45

45

45

3 4 5

459/50203

3rd GEAR

30

30

30

30

30

30

30

332/Y4829

LAYSHAFT - 2WD

30

30

30

30

30

30

30

459/50205

MAINSHAFT

sch

30

30

30

30

30

30

30

Rev Sch

40

40

40

40

40

40

40

6 7 8 9

459/50207

TRANSFER GEAR

30

30

30

30

30

30

30

459/50440

IDLER GEAR

30

30

30

30

30

30

30

459/50429

Z 22 T

30

30

30

30

30

30

30

459/50428

Z 31 T ANNULUS CARRIER

30

30

30

30

30

30

30

10 11

450/12702 PLATE CARRIER 450/10215

70

70

70

70

70

70

70

70

70

70

70

70

70

70

Part Number

Part Description

V.Code

Status 1-Jan 2-Jan 3-Jan 4-Jan 5-Jan 6-Jan 7-Jan 8-Jan

GEARS
G713 Sch Rev Sch Receipt B522 Sch Rev Sch 459/50509 / 1st Gear G150 Receipt Sch Rev Sch Receipt Cumm Schedule Cumm Receipt Sch Rev Sch Receipt B522 Sch Rev Sch 459/50511 / 2nd Gear G150 Receipt Sch Rev Sch Receipt Cumulative Schedule Cumulative Receipt 0 80 80 0

65

65

65

65

65

65

112

64

56 35

48 35

64 35

16 35

40 35

0 35

90

0 35

35 35

35 35

35 35

35 35

35 35

90 0 266

0 100 322 65

35 200 405 65

35 300 504 65

35 400 555 65

35 500 630 65

35 600 665 65

112

G713

64

0 35

136 35

64 35

120 35

56 35

40 35

0 35

0 35

0 35

0 35

0 35

0 35

0 0 144 100 144

0 200 280

0 300 344

0 400 464

0 500 520

0 600 560

Step 4 - Transaction processing and short term scheduling

Customer orders arrive at random This is a day to day accounting system which tracks and schedules every order to meet customer demand Order entry, order fulfillment and physical replenishment

JCB has a fixed demand of 100 machines per day. So there are no major fluctuations in demand on daily basis.

Information flow in Supply Chain Management

Information is overriding element Need for databases Master files: Information about customers, products, materials, suppliers, transportation, production and distribution data- do not require frequent processing Status files- heart of transaction processing- track orders and infrastructure status- updated daily. Essentially using the same information to make all plans right from structuring the network to processing every day supply chain tasks.

 The major server and Information Technology Department was at JCB UK. Data from JCB plants all over the world are centrally integrated through SAP.

Contemporary Trends Channels being divided into two- Fulfillment and Franchised agent Fulfillment channel- responsible for getting the manufacturer s product from the plant to the end user through a highly efficient logistics and inventory management system

Contemporary Trends Fulfillment channel may not take ownership of the product but may perform these functions on a per box fee structure Franchised agents responsible for sales and sales support but will not write the order or supply the product

The Bullwhip Phenomenon

Volatility amplification along the network Increase in demand variability as we move upstream away from the market Mainly because of lack of communication and coordination Delays in information and material flows

Bullwhip effect occurs because of various reasons: Order Batching- Accumulate orders Shortage gaming- Ask for more than what is needed Demand forecast updating

Summary
Segmentation of customers based on service needs Customization of logistics network Listen to signals of market demand and plan accordingly. Differentiate product close to the customer Source strategically Develop a supply chain wide technology strategy Accept channel spanning performance measures

THANK YOU