Introduction to SCM

MODULE 1
MEC702
LOGISTICS AND SUPPLY CHAIN MANAGEMENT

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Syllabus
• Objectives of a Supply Chain Management, Stages of Supply Chain, Value
Chain Process, Cycle view of Supply Chain Process, Key Issues in SCM, Logistics
& SCM, Supply Chain Drivers / Decisions and Obstacles, Supply Chain
strategies, Strategic Fit, Best practices in SCM, Obstacles of Streamlined SCM.
• Supplier Selection, Supplier Quality Audits, Contract Management, Non-
Disclosure Agreement (NDA), Make and Buy Decision while in-out sourcing.

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Supply Chain Management
• A supply chain consists of all parties involved, directly or indirectly, in
fulfilling a customer request.
• The supply chain includes not only the manufacturer and suppliers, but also
transporters, warehouses, retailers, and even customers themselves.
• Within each organization, such as a manufacturer, the supply chain includes all
functions involved in receiving and filling a customer request.
• These functions include, but are not limited to, new product development,
marketing, operations, distribution, finance, and customer service.
• Supply Chain Management (SCM) is the management of the flow of goods,
data, and finances related to a product or service, from the procurement of
raw materials to the delivery of the product at its final destination.
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Supply Chain Animation
Detergents

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Objectives of a Supply Chain Management
• The objective of every supply chain should be to maximize the overall value
generated.
• The value a supply chain generates is the difference between what the final
product is worth to the customer and the costs the supply chain incurs in
filling the customer's request.
• For most commercial supply chains, value will be strongly correlated with
supply chain profitability (also known as supply chain surplus), the difference
between the revenue generated from the customer and the overall cost
across the supply chain.

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Stages of SCM
A typical supply chain may involve a variety of stages. These supply chain stages
include:
• Customers
• Retailers
• Wholesalers/distributors
• Manufacturers
• Component/raw material suppliers

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Stages of SCM

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Stages of SCM
• Each stage in a supply chain is connected through the flow of products,
information, and funds.
• These flows often occur in both directions and may be managed by one of the
stages or an intermediary.
• Each stage in the figure mentioned in previous slide need not be present in a
supply chain.
• The appropriate design of the supply chain depends on both the customer's
needs and the roles played by the stages involved.

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Important Concepts of SCM
• Forecasting
• Inventory
• Strategy
• Planning
• Operations
• Logistics

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Forecast
• Supply chain forecasting refers to the process of predicting demand, supply or
pricing for a product — or a range of products — in a particular industry.
• Supply chain forecasting combines data from past supply with insights and
understandings about demand, to help make the best decisions for the
business – whether it’s stock inventory, cargo booking, budget planning or
expanding to new markets.
• Analyzing supply
• Analyzing demand

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Inventory
• Inventory is the goods or materials a business intends to sell to customers for
profit.
• Inventory management, a critical element of the supply chain, is the tracking
of inventory from manufacturers to warehouses and from these facilities to a
point of sale.
• The goal of inventory management is to have the right products in the right
place at the right time.

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Inventory Inventory Management

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Strategy
• A supply chain strategy is a formal approach to managing the network
between an organization and its suppliers.
• A supply chain strategy is like a roadmap that helps companies get their
products to customers with as little friction as possible.
• This plan ensures that every phase of the supply chain is optimized, including
the sourcing of materials, manufacturing, delivery, and logistics.
• Four factors usually influence an organization’s supply chain strategy:
Industry, Company value proposition, Internal decision-making processes
and Business goals

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Planning
• Supply chain planning (SCP) is the forward-looking process of coordinating
assets to optimize the delivery of goods, services and information from
supplier to customer, balancing supply and demand.
• Supply chain planning is the process of anticipating demand and planning
materials and components to meet that demand, along with production,
marketing, distribution and sales.
• The objective of planning is to balance supply and demand and ensure that
sales revenue opportunities are fully exploited in a timely manner.

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Operations
• Supply chain operations include the systems, structures and processes to plan
and execute the flow of goods and services from supplier to customer.
• To maximize effectiveness, it is critical to evaluate both internal operations
and the extended supply chain that includes suppliers and customers.
• Supply chain management operations govern the overall structure of how a
business plans, creates, receives, and fulfills products.
• Often referred to as OSCM (operations and supply chain management), it
involves monitoring, maintaining, and improving a wide spectrum of both
internal and collaborative processes.

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Logistics
• Logistics is the process of planning and executing the efficient transportation
and storage of goods from the point of origin to the point of consumption.
• The goal of logistics is to meet customer requirements in a timely, cost-
effective manner.
• Many companies specialize in logistics, providing the service to
manufacturers, retailers and other industries with a large need to transport
goods.
• Some own the full gamut of infrastructure, from jet planes to trucks,
warehouses and software, while others specialize in one or two parts. FedEx,
UPS and DHL are well-known logistics providers.

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