Supply chain management

SUPPLY CHAIN MANAGEMENT

MEANING

Supply chain management (SCM) is the management of a network of interconnected business involved in the ultimate provision of product and service packages required by end customers. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption .

DEFINITION

Supply chain management is 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

DEFINITION

According to the Council of Supply Chain Management Professionals(CSCMP), supply chain management encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management. It also includes the crucial components of coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers.

What is SCM ?

SCM is a business network covering from buying, making, moving, warehousing to selling

BuyingBuying

SellingSelling

MakingMakingMovingMoving

WarehousingWare

housing

Dynamics of Material Flow

Supplier Plant RS Logistics Retailer

Traditional SCM

Supply Chain Benefits

Cost

Reduced inventories Reduced waste Reduced total system costs

Service Establishment of a collaborative framework Near real time information flow Reduced variation and increased quality

Business growth opportunities Preferred source for new opportunities Expanded benefits to other customers

Potential Benefits from SCM

Increased market share and sales growth Reduced inventory levels and total SCM costs Decreased order cycle/fulfillment time Increased asset and capital utilization Improved delivery performance Faster response to changing customer requirements Improved return on assets and sales Increased forecast accuracy Reduced cash-to-cash cycle time

ELEMENTS OF SCM

• INVENTORY MANAGEMENT• WAREHOUSING• TRANSPORTATION

What is inventory

1. The stock of material lying with you for which payments are made but which are yet to be delivered to the customers and paid for by them.

2. Material stocked to meet the expected demand in the market.

3.An idle resource which locks the capital.

Features of a good warehouse

1. FMFO – First Manufactured and First Out principle.

2. Maintenance of prompt and correct records.

3. Fast and courteous service to customers.

4. Minimum damages to the material.

5. Place for everything and everything in its place.

6. Protection against pilferage.

7. Regular verification and inspection of material.

8. Regular inventory taking and reconciliation.

9. Maintaining inventory within specified norms.

Logistics Management

'Logistics is the process of strategically managing the procurement, movement and storage of materials (and related information flows) through the organization and its marketing channels

Objectives of Transport Management

1. Cost Optimization

2. Improved service

3. Transportation/logistics as a

competitive differentiator.

4. Time to market

Supply Chain Strategy

“Companies are investing resources--of both time and capital--to improve their supply chain capabilities. But many are not pleased with the return on these investments. The lack of coherent supply chain strategy typically lies at the root of the problem.”

SC Relationship Barriers

Lack of Trust Little Understanding or Commitment to

SC Principles Fear of Relinquishing Control Different Goals & Objectives Inadequate Information Systems Short-term / “Wall Street” emphasis on

outcomes Involvement in too many supply chains

SC Relationship Barriers--Solutions

Develop a New Breed of Manager Build “Relationship-Management” Skills Establish Inter-organizational Teams Create New Performance Measures Invest in Information Technology Develop Long-term Focus (Boards, too) Engage in More Practical and Applied

Research

Problems addressed by supply chain management

Distribution Network Configuration: Distribution Strategy: Trade-Offs in Logistical Activities: Information: Inventory Management: Cash-Flow:

Activities/functions

Strategic level Tactical level Operational level

Strategic level

Strategic network optimization, including the number, location, and size of warehousing, distribution centers, and facilities.

Strategic partnerships with suppliers, distributors, and customers, creating communication channels for critical information and operational improvements such as cross docking, direct shipping, and third-party logistics.

Tactical level

Sourcing contracts and other purchasing decisions.

Production decisions, including contracting, scheduling, and planning process definition.

Inventory decisions, including quantity, location, and quality of inventory.

Transportation strategy, including frequency, routes, and contracting.

Operational level

Daily production and distribution planning, including all nodes in the supply chain.

Production scheduling for each manufacturing facility in the supply chain (minute by minute).

Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the forecast with all suppliers.

Supply chain business process integration

Successful SCM requires a change from managing individual functions to integrating activities into key supply chain processes

Supply chain business process integration involves collaborative work between buyers and suppliers, joint product development, common systems and shared information.

Components of SCM Integration

Planning and control Work structure Organization structure Product flow facility structure Information flow facility structure Management methods Power and leadership structure Risk and reward structure Culture and attitude

Tax efficient supply chain management

Tax Efficient Supply Chain Management is a business model which consider the effect of Tax in design and implementation of supply chain management. As the consequence of Globalization, business which is cross-nation should pay different tax rates in different countries. Due to the differences, global players have the opportunity to calculate and optimize supply chain based on tax efficiency legally. It is used as a method of gaining more profit for company which owns global supply chain.