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SUPPY CHAIN MANAGEMENT Group Members Manoj Jain Jigisha Patel Pinkesh Shah Niraj Singh Mansi Nagrecha Jitendra Solanki 74 90 101 109 112 113 What is Supply Chain Management Supply chain management is a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize system wide costs while satisfying service level requirements. Management beyond the borders of an organization Upstream The upstream business partners are the external organizations that supply products or services to an organization. Downstream The downstream supply chain is the organizations external distribution channels, processes, and functions that the product passes through on its way to the end customer. Evolution Of SCM. The concept of SCM has only recently stepped into the marketing world. It rooted three decades back and has passed through three phases Phase 1: Physical distribution management: This phase is better characterized as inventory push phase when manufacturing was handled in isolation and output was pushed down to the finished goods warehouses. • Phase II : Integrated Logistics Management : This Phase Recognized The Importance Of Integrating Operations Within the Organization Like Sales, Procurement, Manufacturing, Warehousing, Distribution And Transportation To Achieve An Efficient And Effective Goods Distribution System. • Phase III : SCM : The Graduation Of Logistics Management To Its Modern Day Avatar Is Better Known As ‘SCM’. SCM Extends The Scope To Link External Partners Like Suppliers, Vendors, Distributors And Customers With A View To Deliver Enhanced Customer And Economic Value Through Synchronized Management Of The Flow Of Physical Goods and associated Information from Source To Consumption. What Drove Logistics To SCM? One can identify a number of drivers for a paradigm shift from logistics to SCM The major ones are: • First, the expectations of customer for increased value addition, response time sensitivity, need for reliability, cost consciousness and information sensitivity. • Second, the nature of competition favouring firms that have been in a position to decrease lead times as well as operational costs. • Third, the recent revolution taken place in the field of information technology has enabled and encouraged the firms to initiate newer means in the field of distribution management. • Fourth, managers have realized and recognized the need for continuous improvement of process involved in marketing activity. The attitude of managers has changed in favor of integrating all activities in the chain from sourcing to consumption. LOGISTICS MANAGEMENT Logistics management Logistics management is that part of the Supply Chain Management process that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers' requirements Types Of Logistics Third-party logistics: Third-party logistics (3PL)involves using external organizations to execute logistics activities that have traditionally been performed within an organization itself Fourth-party logistics: Fourth-party logistics (4PL) as an integrator that assembles the resources, capabilities and technology of its own organization and other organizations to design, build, and run comprehensive supply chain solutions •Why sudden interest ? Demanding customers Shrinking product life cycles Proliferating product offerings •Why sudden interest ? Growing retailer power in some cases Doctrine of core competency Emergence of specialized logistics providers Globalization Supply Chain Structure SUPPLIER FACTORY DC RDC RETAILER Raw Materials Finished Goods Information Flow Supply chain Flow Material/merchandise flows Information flows Financial flows Supply chain management is the management of flows between and among supply chain stages to maximize total supply chain profitability Merchandise Flow Information Flow Supply Chain Planning Processes Material Requirement Planning Raw Material Requirement Supplier Demand Forecasting Demand Planning Production Plan Plant Warehouse Logistics Order Management Retailer Benefits of SCM Cost and Financial Retailers Improvements Manufacturers Distributors 19 Streamlined inventories and reduced costs Reduced errors and redundant labor Increased visibility of all business transaction Improved return on inventory investment Optimized transportation costs, routes, and load times Increase cost savings from outsourcing for low cost materials Benefits of SCM Improved forecast accuracy as well as resource and distribution planning Processes Improved manufacturing and replenishment cycle time Manufacturers Improvements Enhanced manufacturing scheduling Increased effectiveness of planning and decision making Improved overall efficiency in production 20 APPLICATIONS OF SCM BLOOD BANK IT INDUSTRY RETAIL INDUSTRY COURIER SERVICE INDUSTRY Importance of Supply Chain Management If it’s not in store you can’t show it. If you can’t show it you can’t sell it. What is Retailing? • Retailing – a set of business activities that adds value to the products and services sold to consumers for their personal or family use. Basic elements of a retailing supply chain ACTIVITY INSTITUTION OTHER ACTIVITIES Sourcing materials Materials supplier Warehousing, transport to producer Producing the product Producer Design, warehousing, selling through agents, transport to wholesaler Wholesale distribution Wholesaler Retail distribution Retailer Consumer Warehousing, transport to retailer, cash and carry Regional and local distribution centres, transport to store/ home WAL-MART The US-based Wal-Mart ranked first in the global Fortune 500 list earning revenues of $219.81 billion Wal-Mart is the largest retailing company in the world. Captain Vernon L. Beatty, aide-de-camp to the commander, Defense Supply Center, Columbus, Ohio said, "Supply chain management is moving the right items to the right customer at the right time by the most efficient means. No one does that better than Wal-Mart." Retail Link system More than 10,000 Wal-Mart suppliers use Retail Link to monitor sales of their goods at the store level and replenish inventories as needed. Integrates into one of the largest data warehouses around, with more than 100 terabytes of information. Make daily transactions details (more than 10 million daily) available to every Wal-Mart store by 4 a.m. the next day. Wal-Mart's Best of practice on SCM Relevant information is available to its partner. The system is dynamic and adjust quantity of orders according to current situation Wal-Mart must be able to get most up-to-date information out of the system to do be able to do proper prediction..