ISCM – V

SYLLABUS
Role of Sourcing in Supply Chain – Supplier Selection: Auctions and
Negotiations – Third Party Suppliers – Making Sourcing Decisions –
Pricing and Revenue management in a Supply Chain – Role of
Sustainability in Supply Chains – Agile Supply Chains –
Methodologies for handling disruptions - – Green Supply Chain
Management – Reverse Supply Chain Management - Future of
Supply Chains. Case Study: Suguna Poultry Farming, Kurlon
Matress Products.
 SOURCING
• Sourcing in supply chain management is the process of
finding suppliers to provide goods and services at a
reasonable price. It's a key part of supply chain
management, and any issues with sourcing can disrupt
the entire supply chain.
 TYPES OF SOURCING
• Outsourcing: A third party, either domestic or foreign, is used
to perform tasks or provide services or goods.
• Insourcing: A task is assigned to a team or individual within
the organization.
• Near-sourcing: Sourcing activities are moved closer to where
the goods or services are sold.
• Low-cost country sourcing (LCCS): Materials are sourced
from countries with lower labor and production costs.
• Global sourcing: Goods or services are sourced from
suppliers in global markets.
CONT
• Single sourcing: A single supplier is chosen for all raw
materials, goods, and services.
• Vertical integration: An organization expands its own
supply chain operations rather than outsourcing.
• Joint ventures: Organizations partner to accomplish a goal.
• Captive service operations: An organization sets up a
captive center in a country where it may not yet have a
presence.
• Responsible sourcing: Ethical, social, and environmental
considerations are incorporated into procurement decisions.
 STEPS IN SOURCING
• Developing a sourcing strategy - This strategy is based on market
research and outlines how to select suppliers, negotiate, and manage
contracts. It also defines performance metrics and objectives.
• Analyzing the supplier market - This involves evaluating supplier
profiles, including their revenue, market share, and current and
future risks and opportunities
• Negotiating with suppliers - This involves building relationships
with preferred vendors and negotiating terms, service levels, and
prices.
• Conducting a spend analysis - This involves collecting and
analyzing spend data to identify areas of spend and potential savings
CONT
• Selecting suppliers - This involves establishing clear
evaluation criteria to select credible suppliers that meet
business requirements.
• Conducting a supply market analysis - This involves
identifying markets that are likely to provide reliable,
consistent, and high-quality raw materials, components,
finished goods, and services.
• Monitoring supplier performance - This involves
monitoring supplier performance after signing a contract to
identify issues early on and take corrective action.
 Sustainable SCM
•A sustainable supply chain is one that
uses environmentally and socially sustainable practices at
every stage to protect the people and environments across the
whole chain. This means an organisation upholds
environmental and social standards for their own operations
and their suppliers’ operations.
• Environmental standards include issues like environmental
degradation, deforestation, greenhouse gas emissions,
pollution and water security.
• The social standards focus on areas like working conditions,
forced labour, labour practices and health and safety.
Sustainable SCM – Approach

Green SCM

Ethical SCM

Responsible
SCM
 Sustainable SCM – Approach
• Green supply chain - This emphasises the environmental standards
within a supply chain. These include issues like pollution, water usage,
greenhouse gas emissions, deforestation and other impacts that
operations across a supply chain may have on the planet. A green supply
chain may not consider the ethical and social impacts of business
activities.
• Ethical supply chain - Some people use the term
“ethical supply chain” interchangeably with terms like “sustainable” or
“responsible supply chain”. This term suggests an emphasis on managing
the social impacts and working conditions within a supply chain.
• Responsible supply chain - This term usually refers to an
approach to supply chain management that considers both social and
environmental issues. Organisations actively source and create products
and services in an ethical, environmentally and socially conscious way.
 Waste Visibility &
Manageme Transparenc
nt y

Reduce –
Collaboratio
Carbon
n
footprints

SCM –
Supplier Sustainab Training &
Selection le Education
Strategies
CONT
• Supplier selection - When choosing suppliers,
companies may consider whether they share the same
sustainability goals and environmental and social
values. For example, do they support ethical labor
practices and work to limit the environmental impact of
their business practices? Through
supplier relationship management (SRM), companies
can ensure that the companies and organizations they
work with meet sustainability standards, such as KPIs
around carbon emissions, waste reduction, and
responsible sourcing of raw materials, as well as form
effective risk-management strategies.
CONT
• Reducing carbon footprints - Reducing the carbon
footprint of supply chain practices happens in a number
of ways. For example, by using more
fuel-efficient vehicles, consolidating shipments and
planning route optimizations, companies and their
suppliers can reduce GHG emissions. Companies may
also choose to invest in renewable energy and energy-
efficient technologies. This can help reduce
Scope 3 emissions, which are indirect emissions
generated by a company's value chain.
CONT
• Waste management - Companies can reduce supply
chain waste by adopting circular economy principles—
that is, operating in ways that focus on recycling, reuse,
sharing and resource efficiency. Examples include
reducing the amount of packaging or using recyclable
elements, adopting composting practices and investing
in renewable energy. They can also implement reuse
programs that limit the need for new resources within
the supply chain or allow consumers to upgrade or
dispose of products in a responsible way.
CONT
• Visibility and transparency - Supply chain visibility refers
to the ability of companies to track and monitor
products as they move through the supply chain. It’s an
important way companies can monitor suppliers'
environmental and social sustainability practices and
trace the origin of raw materials.
Supply chain transparency practices extend that
visibility to the external world, allowing consumers,
stakeholders and regulatory bodies access to
information about environmental and social impacts
that may guide decision-making and build trust.
CONT
• Collaboration - Collaboration allows companies and
suppliers to work towards shared sustainability goals,
such as reducing carbon emissions or minimizing waste.
This may involve knowledge sharing about best
practices, using resources jointly among providers,
coordinating transportation or manufacturing for
maximum efficiency, and mutual investments in
sustainable technologies or processes.
CONT
• Training and education - Training and education can
help employees and suppliers understand the
importance of sustainability and how to implement
sustainable practices. This can help create a culture of
sustainability throughout the supply chain and ensure
that ongoing decision-making aligns with those values.
 Green Supply Chain Management
• Green supply chain management is a set of
standardised practices and strategic approaches to
implementing control on conventional supply chain
activities to make them environment-friendly and
sustainable.
 OBJECTIVES OF GREEN SCM
• Reducing emissions: Companies can reduce their carbon
footprint by understanding how they emit greenhouse gases
and using sustainable sourcing and energy efficiency practices.
• Minimizing waste: Companies can reduce waste by using
sustainable packaging, such as recycled, biodegradable, or
minimized packaging.
• Using renewable resources: Companies can increase their
use of renewable resources.
• Sustainable sourcing: Companies can source materials
sustainably by selecting suppliers who use recycled materials,
reduce water usage, and minimize their carbon footprint.
CONT
• Compliance with regulations: Companies can ensure
compliance with environmental protection regulations.
• Transparency and accountability: Companies can
ensure transparency and accountability.
• Cost savings: Companies can lower their operational
costs by optimizing processes, reducing waste, and
improving resource efficiency.
• Risk management: Companies can reduce their
reliance on scarce resources and diversify suppliers to
better withstand disruptions and uncertainties.
CONT
• Reverse logistics: Companies can move goods back to
the manufacturer or suppliers for repair, reuse,
refurbishment, or resale.
• Green distribution: Companies can reduce waste and
improve the energy efficiency of green products in
warehousing.
 Components of Green SCM
• Sustainable Procurement: Companies source materials and components from
suppliers who adhere to sustainable and eco-friendly practices. This ensures that
the raw materials are obtained responsibly and with minimal environmental impact.
• Eco-Friendly Transportation: Reducing carbon emissions through efficient
transportation methods, such as using electric or hybrid vehicles and optimizing
shipping routes.
• Lean Manufacturing: Minimizing waste, energy consumption, and emissions in
the production process, often achieved through process optimization and
innovative technologies.
• Packaging and Recycling: Using environmentally friendly packaging materials
and recycling or reusing packaging whenever possible to reduce waste.
• Reverse Logistics: Implementing effective processes for product returns,
recycling, and disposal to reduce the environmental impact of end-of-life products.
• Stakeholder Collaboration: Collaborating with suppliers, customers, and
partners to achieve sustainability goals across the entire supply chain.
 Types of Reverse Logistics
• Green reverse logistics - This type of reverse logistics is
environmentally-friendly and cost-effective. It involves repairing,
recycling, or disposing of products that cannot be returned to
stock.
• Return reverse logistics - This type of reverse logistics involves
returning products that can be resold to stock. For example, a
customer may return an item of clothing that is the wrong size.
• Remanufacturing, refurbishing, and reconditioning - These
activities involve repairing, rebuilding, and reworking
products. This may include cleaning, repairs, or upgrades to
improve the product's quality.
CONT
• Packaging management - This type of reverse logistics focuses
on reusing packing materials to reduce waste and disposal.
• Unsold goods - This type of reverse logistics involves handling
returns from retailers to manufacturers or distributors
• End-of-life (EOL) - This type of reverse logistics involves
products that are no longer useful or do not work. Manufacturers
often recycle or dispose of these products
• Delivery failure - This type of reverse logistics involves returning
products to the point of origin after failed deliveries.
 Reverse SCM - Process
• Returns authorization - Customers request returns, and the
company verifies the request and issues return labels
• Collection and transportation - The company collects the
returned items and transports them to a facility for processing
• Sorting and inspection - The company assesses the condition of
the returned items to determine if they can be resold, refurbished,
recycled, or disposed of
• Reconditioning and refurbishing - The company reconditions
items that are in good condition but need minor repairs or
refurbishment
• Redistribution or disposal - The company redistributes the items
for resale or responsibly disposes of them
 Reverse SCM – Components
Product returns and refurbishment: Handling
returned products and reselling them after they've been
repaired or verified to be in good condition
Product repair and remanufacturing: Rebuilding
products with new, repaired, or reused parts
Recycling and waste management: Managing waste
and recycling products
Closed-loop supply chain: A supply chain where a
company controls the entire process of both forward and
backward shipments
 Agile SCM
• An agile supply chain is a supply chain that can quickly
and efficiently respond to changes in demand, supply,
and other market factors. Agile supply chains can help
businesses stay competitive and maintain customer
expectations
 Characteristics of an agile supply
chain
• Responsive: Agile supply chains can quickly adjust production, inventory,
and operations to respond to changes.
• Flexible: Agile supply chains can adapt to market changes, such as
demand spikes or raw material shortages.
• Efficient: Agile supply chains use efficient processes and empowered
employees
• Cost-effective: Agile supply chains can reduce waste and be cost-efficient.
• Uses technology: Agile supply chains use technologies like AI, IoT, and Big
Data to optimize performance.
• Collaborative: Agile supply chains collaborate with suppliers and
departments to scale production.
• Uses a "pull" system: Agile supply chains pause production until demand
is met.
 Structural agility Operational agility

A company’s ability to adjust its supply chain A company’s ability to adjust its supply chain
by realigning procurement, inventory, and by simplifying operations
capacity across the supply chain
Has the ability to quickly optimize asset and Has the ability to reduce manufacturing cycle
capacity utilization as well as reconfigure and lead times, often by leveraging vendor
inventory flows for timely production and supplier relationships
Has flexibility to scale production overall and Requires real-time insight into operations and
across product lines swift process realignment

Identifies and prepares for medium- to long- Responds to short-term, unexpected demand
term disruptions and supply changes
 SCM Agility Benefits
• Improved customer satisfaction: By meeting and exceeding
customer expectations, businesses can build a loyal customer
base.
• Increased responsiveness to customer
demands: Businesses can respond more quickly to changing
customer demand.
• Reduced inventory costs: Businesses can reduce inventory
levels and the risk of excess inventory.
• Improved supply chain visibility: Businesses can increase
supply chain visibility and collaboration.
• Increased flexibility: Businesses can increase flexibility in
production and distribution processes.
CONT
• Enhanced ability to manage risk: Businesses can
enhance their ability to manage risk and uncertainty.
• Improved efficiency of operations: Businesses can
optimize processes across the supply chain.
• Cost savings: Businesses can save money by
responding more quickly to changing customer demand
and market conditions
 SCM Agility Strategies
• Demand forecasting
• Synchronized production and scheduling
• SKU reorder points
• Real-time data
• Warehouse automation
• Geographic warehousing
• Third-party logistics
CONT
• Demand forecasting - Companies can create agile
supply chains by investing in demand forecasting
software that involves predictive analytics, the
application of AI, statistics, and modeling techniques to
analyze vast data sets. Inventory management and
demand planning software with predictive analytics
produce more accurate forecasts for consumer demand
as well as more general consumer behaviors and stock
replenishment needs. With these forecasts, businesses
can fine-tune manufacturing resources and inventory
levels to meet demand, avoiding both stockouts and
excess stock.
CONT
• Synchronized production and scheduling - Production
scheduling involves maximizing efficiency in the manufacturing
process by synchronizing a company’s stock needs with its capacity
in terms of machinery, labor, raw material lead times, and more. It
involves carefully planning which orders to fulfill, in which
sequence, to minimize machine downtime, waste, and delay in
delivering finished goods. Companies that have tightly synchronized
their production and scheduling can adjust production schedules for
quick responses to demand changes. For example, when hit with an
unexpected shortage of a particular widget, a manufacturer can
swiftly reallocate its machinery and labor resources to work on
products that don’t require those widgets.
CONT
• SKU reorder points - The SKU reorder point is the point at which a business
must reorder inventory of a particular item to avoid stockouts. Calculating SKU
reorder points makes the supply chain more agile by ensuring companies
order only the stock they need, and only when they need it, so they aren’t
caught with too little or too much stock amid demand shifts.
• Real-time data - Companies with an agile supply chain communicate with
their suppliers and partners in manufacturing, logistics, and distribution easily
and often—ideally through a cloud-based supply chain management platform
—and share real-time data throughout the network. This quality of data and
type of connectivity allow all parties in the supply chain to proactively make
decisions that affect them collectively. For example, imagine a manufacturing
facility’s production and packaging of a commodity will be completed in three
days versus the forecasted two days. Its software system automatically
triggers an alert as soon as the deviation is detected, and logistics providers
are notified to pick up commodities for shipment at a specific date and time.
CONT
• Warehouse automation - Automating warehouse processes
helps the supply chain react faster to changes in supply and
demand. A cloud-based warehouse management system can
automate order processing—which includes picking, packing, and
shipping—while Internet of Things (IoT) technologies such as
smart shelves and sensors automatically track inventory levels
and movements. Meanwhile, autonomous mobile robots automate
tasks such as order picking and unloading shipments. Automating
these types of warehouse processes might, for example, help a
distributor ship its average order 24 hours faster. That way, if
demand suddenly spikes, the distributor can meet it while a
competitor with slower, manual warehouse processes misses out
on the revenue opportunity.
CONT
• Geographic warehousing - By analyzing revenue, customer, and SKU
data, companies can configure their supply network and warehouse facilities
to best serve the most profitable customers and products, a strategy known
as geographic warehousing. For example, if 500 SKUs in a product set of
1,000 SKUs tend to sell to 10 of a distributor’s largest customers in a
specific state, then it might expand warehouses in that region. It can then
deliver to those valuable customers even when bad weather shuts down air
freight because the warehouse is close enough to deliver by truck.
• Third-party logistics - Companies can build supply chain agility by
tapping into the resources of third-party logistics (3PL) providers, which offer
outsourced warehousing, fulfillment, and transportation services. For
example, a retailer with four warehouses might partner with a 3PL that
operates 15 warehouses across the United States. The retailer gains the
ability to ship from alternate locations in the event of demand surge in the
Southwest or inclement weather in the Northeast.
 METHODOLOGY FOR HANDLING DISRUTIONS IN
SCM
• Identify the root cause: The first step in handling a disruption
is to identify the cause.
• Create a plan: Develop an emergency plan or contingency plan
to include supply chain disruptions in your business continuity
plan.
• Communicate: Communicate with customers, suppliers,
carriers, and remote and onsite workers.
• Evaluate: Evaluate the impact on cash flow, the supply chain
components, and buying behavior.
• Improve: Improve the process and increase flexibility by
repurposing assets, inventory, and capabilities.
CONT
• Monitor: Monitor and analyze your supply chain data.
• Automate: Implement automation solutions to help
manage disruptions
• Strengthen relationships: Strengthen relationships
with suppliers
• Assess: Assess your supply chain and identify risks and
weaknesses.
• Balance: Balance supply chain logistics with risk
management.
• Identify back-up: Identify back-up suppliers and
vendors
 Reference
• https://cleartax.in/s/green-supply-chain-management-gs
cm
• https://flow.space/blog/what-is-reverse-logistics/
• https://www.oracle.com/in/scm/supply-chain-agility/
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