Supply Chain Management

INPUTS OUTPUTS OPERATIONS People Buildings Raw materials Equipments Information Investment Etc. Goods Services Profits Waste Wages Etc. Manufacture Serve Supply Transport Sell Train Etc. OPERATIONS RESULTS IN OUTPUT

DEMAND AND SUPPLY CYCLE CUSTOMERS SUPPLY OF PRODUCTS DEMAND FOR PRODUCTS OPERATIONS OTHER INPUTS OTHER OUTPUTS PASSED TO CREATE PASSED TO ARRANGE

ROLE OF LOGISTICS Internal supplier Internal customer Operations within the organization External supplier External customer Materials Management Outbound Logistics Inbound Logistics Logistics

LOGISTICS Logistics is the function responsible for the flow of materials from suppliers into an organization, through operations within the organization, and then out to customers. The supply system includes the process of planning, implementing, and controlling the efficient, effective flow and storage of goods and services from the organization from its place of production to the place where it is required. This supply system is referred as ‘Logistics Management’.

MATERIALS Materials are all the things that an organization moves to create its products. These materials can be tangible (such as raw materials) and intangible (such as information).

Seedling Young Tree Mature Tree Logs Final Customer Small roll of Finished paper Large roll of paper Sheets of paper Packer Wholesaler Retailer Raw Paper Wood Pulp Grown by gardener Planted by forester Felled by logger Chipped Processed Processed Finishing Cutting Transport Transport Transport Purchase SUPPLY CHAIN FOR PAPER

EXAMPLE OF SUPPLY CHAIN Wholesaler Manufacturer Retailer Supplier Supplier Customer Customer

PROCESS OF SUPPLY CHAIN INTEGRATION Deliver Source Make Deliver Source Make Deliver Source Deliver Make Source Sub-supplier Supplier Enterprise Customer Sub-customer Enterprise Systems

SUPPLY CHAIN OF MILK FARM MILK TANKER COLLECTION Supplier Supplier Customer Customer DAIRY Supplier BOTTLING PLANT Customer supplier Customer SUPER MARKET DISTRIBUTER Customer Customer Customer Supplier Supplier

SUPPLY CHAIN MANAGEMENT - DEFINITION A supply chain consists of activities and materials that organizations move through on their journey from initial suppliers to final customers. As goods and services flow from supplier to producer to customer to final user, supply chain management is concerned with the interfaces between organizations. SCM is the management of linkages between organizations. SCM is a network of the manufacturer’s suppliers, and supplier’s suppliers on the one hand and customers and customer’s customers on the other hand. This network exists to ensure a free and smooth flow of information, goods, services and profits among all its participants.

OBJECTIVES OF SUPPLY CHAIN To reduce the physical supply chain links; To define supply chain responsibilities to a core service competency To decrease the time and cost of getting end user customer products in required quantity at the place of requirements.

ACTIVITIES IN A SUPPLY CHAIN Initial Supplier 3 rd tier Supplier 2 nd tier Supplier 1 st tier Supplier Organization 1 st tier customer 2 nd tier customer 3rd tier customer Final customer Upstream activities Downstream activities

SUPPLY CHAIN AROUND A MANUFACTURER 3 rd tier Supplier 2 nd tier Supplier 1 st tier Supplier Manufacture 1 st tier customer 2 nd tierl customer 3rd tierl customer Material Supplier Component Supplier Sub-assembly Supplier Wholesalers Retailers End users

SUPPLY CHAIN STAGES Supplier Wholesaler / Distributor Retailer Customer Retailer Customer Wholesaler / Distributer Supplier Supplier Wholesaler / Distributor Customer Retailer Manufacturer Manufacturer Manufacturer

SUPPLY CHAIN STAGES-EXAMPLE OF CONSTRUCTION ACTIVITIES ACC Refractory, Wholesaler / Distributor Retailer Ansal Builder Retailer Unitech, DLF Wholesaler / Distributer Supplier Indian Oil Wholesaler / Distributor Customer Retailer Manufacturer L&T Ultracement Manufacturer Manufacturer Saurashtra cement Hathi Cement

MOVEMENT WITHOUT A WHOLESALER Factories 24 routes customers

MOVEMENT WITH A WHOLESALER Factories 3 routes inwards customers WHOLESALER 8 routes outwards Using intermediaries simplifies the supply cahin

BENEFITS OF WELL DESIGNED SUPPLY CHAIN -1 Best location of operations, regardless of the location of customers. Concentrating operations in large facilities, benefits of economies of scale obtained. Producers do not keep large stocks of finished goods, as the same are kept down the supply chain nearer to customers. Higher price discounts to wholesalers due to large order size.

BENEFITS OF WELL DESIGNED SUPPLY CHAIN - 2 Wholesaler keeps stocks of many suppliers, giving retailers a choice of goods. Wholesalers are near to retailers and have short lead time. Retailers carry less stocks as wholesalers provide reliable deliveries. Retailers can have small operations, giving a responsive service near to customers. Transport is simpler with fewer, larger deliveries thus reducing costs. Organization can develop expertise in specific types of operations.

ACTIVITIES OF LOGISTICS Procurement / purchasing Inward transport Receiving Warehousing Stock control Order picking Materials handling Outward transport Physical distribution of finished goods Recycling, returns, and waste disposal Locations communication

Supply Chain Management

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