Supply Chain Management

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Fierce competition in today?s global markets, the introduction of products with shorter and shorter life cycles, and the heightened expectations of customers have forced business enterprise to invest in, and focus attention on, their supply chains. This, together with continuing advances in communications and transportation technologies (e.g., mobile communication, Internet, and overnight delivery), has motivated the continuous evolution of the supply chain and of the techniques to manage it.
? If a company makes a product from parts purchased from suppliers, and those products are sold to customers, then you have a ?supply chain?. The supply chain, which is also referred as the logistics network, consist of suppliers, manufacturing centers, warehouses, distribution centers, and retail outlets, as well as raw material, work in process inventory, and finished product that flow between the facilities.
As supply chain Management involves procuring the right inputs (raw materials, components and capital equipments); converting them efficiently into finished products and dispatching them to the final destinations; there is a need to study as to how the company's suppliers obtain their inputs. The supply chain perspective can help the retailers identify superior suppliers and distributors and help them improve productivity, which ultimately brings down the customers costs. At the same time, Market logistics helps planning the infrastructure to meet demand, then implementing and controlling the physical flows of material and final goods from point of origin to points of use, to meet customer requirements at a profit.
To ensure that the supply chain is operating as efficient as possible and generating the highest level of customer satisfaction at lowest cost, company have to adopt supply chain management processes and associated technology.
?This presentation provides a conceptual understanding of what a supply chain is, and the various issues while designing, planning, operating a supply chain.

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1.1 Supply chain-

A supply chain consists of all parties involved, directly or indirectly, in fulfilling a customer request. As the supply chain starts and ends with the customer a simple supply chain is made up of several elements that are linked by movement of product along it.

Such elements are-
1.Customer:The customer starts the chain of events when they decide to purchase a product that has been offered for sale by a company. The customer contacts to the retailer.

2.Manufacturers: Manufacturer manufacture the product as per the customer requirement. Company purchase the raw material as per the requirement of the product from the vendors that are placed in local market.

3.Purchase:Components of the product are purchase from market by asking the tenders from venders. And by this process venders are decided.

4.Wholesalers /Distributors: Distributors are fixed by the manufacturer to distribute the product to retailers.

5.Transportation: Transportation is the key factor of the supply chain it transports the material and product from company to distributor to retailer and also brings the marerial to manufacturing unit from suppliers and vendors.

6. Retailers: Retailer is only factor that is connected with directly with customer. That?s why retailers role is much more important in supply chain.

Consider a customer walking into a Big Bazaar store to purchase noodles. The supply chain begins with a customer and his need for noodles. The next stage of the supply chain is the big bazaar retail store that the customer visits. Big Bazaar stocks its shelves using inventory that may have been supplied from finished goods warehouse or a distributor using trucks supplied by third party. The distributor in turn is stocked by manufacturer (say nestle, India). The nestle India plant receives raw material from a variety of suppliers, who may have been supplied by lower tier suppliers. This suppliers receives grains from farmers. Then the company manufacturer decide to make the noodles by customers requirement to satisfy his needs. ?


Supply chain management (SCM) is the management of a network of interconnected businesses 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 (supply chain).
Another definition SCM is the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally."

2.1 IDEA

More common and accepted definitions of Supply Chain Management are:

  • 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.
  • Global Supply Chain Forum - Supply Chain Management is the integration of key business processes across the supply chain for the purpose of adding value for customers and stakeholders.
  • 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. In essence, supply chain management integrates supply and demand management within and across companies. More recently, the loosely coupled, self-organizing network of businesses that cooperate to provide product and service offerings has been called the Extended Enterprise.

A supply chain, as opposed to supply chain management, is a set of organizations directly linked by one or more of the upstream and downstream flows of products, services, finances, and information from a source to a customer. Managing a supply chain is 'supply chain management'.

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Supply chain management must address the following problems:

  • Distribution Network Configuration: number, location and network missions of suppliers, production facilities, distribution centers, warehouses, cross-docks and customers.
  • Distribution Strategy: questions of operating control (centralized, decentralized or shared); delivery scheme, e.g., direct shipment, pool point shipping, cross docking, DSD (direct store delivery), closed loop shipping; mode of transportation, e.g., motor carrier, including truckload, LTL, parcel; railroad; intermodal transport, including TOFC (trailer on flatcar) and COFC (container on flatcar); ocean freight; airfreight; replenishment strategy (e.g., pull, push or hybrid); and transportation control (e.g., owner-operated, private carrier, common carrier, contract carrier, or 3PL).
  • Trade-Offs in Logistical Activities: The above activities must be well coordinated in order to achieve the lowest total logistics cost. Trade-offs may increase the total cost if only one of the activities is optimized. For example, full truckload (FTL) rates are more economical on a cost per pallet basis than less than truckload (LTL) shipments. If, however, a full truckload of a product is ordered to reduce transportation costs, there will be an increase in inventory holding costs which may increase total logistics costs. It is therefore imperative to take a systems approach when planning logistical activities. These trade-offs are key to developing the most efficient and effective Logistics and SCM strategy.
  • Information: Integration of processes through the supply chain to share valuable information, including demand signals, forecasts, inventory, transportation, potential collaboration, etc.
  • Inventory Management: Quantity and location of inventory, including raw materials, work-in-progress (WIP) and finished goods.
  • Cash-Flow: Arranging the payment terms and methodologies for exchanging funds across entities within the supply chain.

Supply chain execution means managing and coordinating the movement of materials, information and funds across the supply chain. The flow is bi-directional.

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