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Supply Chain Management
Session I_- Introduction
Definitions.
Value Chain / Supply Chain / Logistics.
Tasks, Roles & Responsibilities.
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Supply Chain Management
Session IIntroduction to Supply Chain
Management
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Supply Chain Management
Session _- IntroductionDefinition
A supply chain is a network of facilities
and distribution options that performs thefunctions of procurement of materials,
transformation of these materials into
intermediate and finished products, andthe distribution of these finished products
to customers.
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The Supply Chain Concept What
is meant by Supply Chain ?
It is a network of linkedorganizations which work
synchronously & harmoniously todeliver value to end customers.
In the future, competition will not
be company vs. company butSupply Chain vs. Supply Chain.
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The Supply Chain Concept What
is meant by Supply Chain ?
The purists define the Supply Chain
as from the ground to the customer.
Thus the Supply Chain is a Business
Process that runs acrossorganizational boundaries as well asfunctional boundaries within the
organization.
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The Supply Chain Concept What is
meant by Supply Chain ?
Within the organization, itencompasses all the steps betweenthe Supplier & the Customer.
Thus it includes traditional functions
such as Purchasing, Planning,Production, Distribution & CustomerService.
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Supply Chain ManagementSession - Introduction
Supply chains exist in both service
and manufacturing organizations,
although the complexity of the chainmay vary greatly from industry to
industry and firm to firm.
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0
Suppliers Consumers
DistributionManufacturingProcurement
Demand & Supply Chain Planning
Information Flow
Product Flow
Inbound Logistics Outbound Logistics
he Supply Chain
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Figure:A typical supply chain network
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The value Supply Chain Concept Whatis meant by value Supply Chain ?
The value Supply Chain is thecombination of material andinformation flow required to source,
make, and deliver goods & services tothe customer.
The key steps
Source
Make
Deliver
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The value Supply Chain Concept Whatis meant by value Supply Chain ?
The supporting steps
Design Plan
Sell
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The Supply Chain Concept What
is meant by Value Chain ?
The key enablers are
Information Technology
Human Resources
Finance
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Supply Chain ManagementSession - Introduction
Evolution
Traditionally, marketing, distribution,
planning, manufacturing, and thepurchasing organizations along the
supply chain operated independently.
These organizations have their own
objectives and these are often conflicting
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Supply Chain Integration and Evolution
The Driving Force
The key drivers for integration are the
problems arising from operating in
functional silos within the organizationand inadequate coordination with
trading partners.
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Supply Chain Integration and
Evolution The Driving Force
- Each function does not control more thana few steps of the process.
- Duplication of activities and competition
between functions.
- Focus on functional goals and objectives.
Supply Chain Integration integrates theMaterial, Information & Financial flows.
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Supply Chain ManagementSession - Introduction
Evolution
Clearly, there is a need for a
mechanism through which thesedifferent functions can be integrated
together. Supply chain managementis a strategy through which such an
integration can be achieved.
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Supply Chain ManagementSession - Introduction
Evolution
Supply chain management typically extends
beyond organizational boundaries acrossdifferent firms in which each channel
member operates independently.
Therefore coordination between the
various players in the chain is key in its
effective management.
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Supply Chain Integration and
Evolution - The Stages
There are 4 distinct stages in the
evolution of a supply chain
Stage I Fragmented Pyramid.Below average to average performing
companies in many industries still
operate in Stage I.
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Supply Chain Integration and
Evolution - The Stages
Stage I Fragmented Pyramid.
This stage is characterized by-
-Arms length relationships between
departments, plants, divisions SBUsetc.
- -Adversarial relationships with other
organizations.
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Supply Chain Integration and
Evolution - The Stages
Stage II Integrated Enterprise.
Above average performing companies in
many sectors operate in Stage II.
This stage is characterized by-
- No departmental barriers, focus on
enterprise-wide processes.- Limited commercial cooperation with other
enterprises.
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Supply Chain Integration and
Evolution - The Stages
Stage II Integrated Enterprise.
Current ERP systems &technologies are designed to
enable companies to progress
to and operate in Stage II.
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Supply Chain Integration and
Evolution - The Stages
Stage III Integrated Interprise.
A few excellent companies are operating in
Stage III.This stage is characterized by-
- Extensive commercial, logistical &
electronic cooperation between supplychain partners.
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Supply Chain Integration and
Evolution - The Stages
Stage III Integrated Interprise.
- Extended-ERP(E-ERP / XRP), CRM and
SCM systems & technologies aredesigned to enable companies to progress
to and operate in Stage III.
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Supply Chain Integration and
Evolution - The Stages
Stage IV Virtual Value Network.
Currently, this exists only at a conceptual
level as the business practices, systemsand infrastructure required to enable
Stage IV are at a design / pilot level.
However, leading companies in thesoftware & high tech industries have
begun to exhibit key attributes of operating
in this stage.
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Supply Chain Integration and
Evolution - The Stages
Stage IV Virtual Value Network.
This stage is characterized by an opportunistic
teaming of selected value web members into a
(temporary or permanent) virtual company.Two companies may be each others supplier,
competitor, partner, customer at different points
of time (or even at the same time !), as theychase several opportunities and participate in
several virtual companies.
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Supply Chain Integration The Key
Benefits
The Key benefits to & impact on theorganization are reflected in
improved performance in
- Internal Business Capability.
- Customer & Shareholder Value.
- Competitive Flexibility & Adaptiveness.- Organizational Learning & Knowledge
Management.
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Supply Chain Integration The
Key Benefits
These are in turn reflected in
- Reliable Demand Management.
- High Customer Service Levels.- Reduced Lead Times.
- Optimum Working Capital Costs.
- Optimum Supply Chain Costs.
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Supply Chain ManagementSession - Introduction
Supply Chain Decisions
Location Decisions
Production Decisions
Inventory Decisions
Transportation Decisions
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Supply Chain ManagementSession - Introduction
Supply Chain Decisions
Location Decisions
The geographic placement ofproduction facilities, stocking points,
and souring points (size, number, and
location of these).
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Supply Chain ManagementSession - Introduction
Supply Chain Decisions
Production Decisions
What products to produce, and whichplants to produce them in, allocation of
suppliers to plants, plants to DC's, and
DC's to customer markets.
The possible paths by which the product
flows through to the final customer
(N
etwork Design).
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Supply Chain ManagementSession - Introduction
Supply Chain Decisions
Inventory Decisions
Inventories at every stage of the supply chain
raw materials, semi-finished or finished goods.
Deployment strategies (push versus pull),
control policies --- the determination of the
optimal levels of order quantities and reorderpoints, and setting safety stock levels, at each
stocking location
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Supply Chain ManagementSession - Introduction
Supply Chain Decisions
Transportation Decisions
The mode choice .
Trading-off the cost of using the particular mode
of transport with the indirect cost of inventory
associated with that mode.
Shipment sizes (consolidated bulk shipments
versus Lot-for-Lot), routing and scheduling of
equipment.
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The Supply Chain activities
Broadly. The Chain activities can bebroadly divided into
1) Understanding Supply Chain
Requirements -These include : Marketing& Sales, Customer Service & Order
Fulfillment, Forecasting, Planning &
Scheduling.
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The Supply Chain activities
2) Fulfilling Supply Chain Requirements -These include : Purchasing & Incoming
Logistics.
Manufacturing & Packaging.Distribution & Outbound Logistics.
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The Supply-Side Management and
Demand-Side Management Concept
These are called as the Demand-
Side Management and Supply-
Side Management respectively.