Professional Documents
Culture Documents
Dr RAVI SHANKAR
Dr.
Professor
Department of Management Studies
Indian Institute of Technology Delhi
Hauz Khas, New Delhi 110 016, India
Phone: +91-11-2659-6421 (O); 2659-1991(H); (0)-+91-9811033937 (m)
Fax: (+91)-(11) 26862620
Few Information
Text Book
Simchi-Levi et al.: Designing
Course Objectives
To understand the basics
of SCM
To understand the current
practices in SCM
To develop
p decision
making capabilities in
SCM
To understand and
develop different
strategies of SCM
6
Sources:
plants
vendors
ports
Regional
Warehouses:
stocking
points
Customers,
demand
centers
sinks
Field
Warehouses:
stocking
points
S
Supply
l
Inventory &
warehousing
costs
Production/
purchase
costs
Transportation
costs
Inventory &
warehousing
costs
Transportation
costs
7
S
U
P
P
L
I
E
R
S
C
U
S
T
O
M
E
R
S
Sales
Distribution
Manufacturing
Purchasing
based !
No attempt to look holistically!
Sales
S
U
P
P
L
I
E
R
S
C
U
S
T
O
M
E
R
S
Distribution
Manufacturing
Purchasing
Manufacturer
Distributor
Retailer
Customer
10
downstream
11
Intel,
AMD
Microsoft,
Red Hat
Seagate,
IBM
Toshiba America
I i California
Irvine,
C lif
i
North America DC
Europe DC
Toshiba Turkey
12
downstream
In order to
Further
Refinement of
SCM Capabilities
SCM
Formation/
Extensions
E
t
i
JIT, TQM, BPR,
Alliances
Inventory Management/Cost
Optimization
Traditional Mass Manufacturing
1950s
1960s
1970s
1980s
1990s
2000s
Beyond
15
1980s
Purchasing
Requirements Planning
Materials
Management
Production Planning
1990s
Manufacturing Inventory
2000s
Operations Scheduling
Logistics
Materials Handling
Supply Chain
Management
Packaging
Inventory
Facility Planning
Physical
Distribution
Order Processing
Information Technology
Transportation
Marketing
Strategic Planning
16
Strategy
((Design)
g )
Planning
Operation
17
The Enterprise
Fulfillment and Development Supply Chains
Developmen
nt Supply Chain
Plan/Design
Supply
Product Architecture
Make/Buy
Early Supplier Involvement
Source
Strategic Partnerships
Suppliers Selection
Supply Contracts
Produce
Distribute
Sell
18
Execution Systems
Delivery Scheduling
Operations Scheduling
Transportation Planning
Manufacturing Planning
Detail
Tactical
Distribution Planning
Inventory Planning
Supply Chain Planning
Sales & Operations Planning
Demand Planning
Strategical
Hour
Week
Quartile
Year
19
Time
supermarket.
The grocery industry could save $30 billion (10% of operating
the dealership.
U.S. companies spend more than $1 trillion in supply-related
activities
ac
es ((10-15%
0 5% o
of G
Gross
oss Domestic
o es c Product)
oduc )
Transportation 58%
Inventory 38%
Management 4%
21
While K-Mart declared Bankruptcy in 2001 while WalMart became the largest retailer in USA and perhaps
in the world.
Dell has been able to generate profits even when its
competitors lost money on their PC operations.
Honda has established itself as a dominant brand in
automobiles.
What have these firms done? What is the secret of their
success?
22
Master Board
Hard disk
Dell Assembly
Plant
Website
or Phone
Customer wants
To buy computer
Customers Order
SRAM
23
Cost per
Percent
Shirt
Saving
Manufacturer
Distributor
Retailer
Customer
Rs.527.20
0%
Manufacturer
Distributor
Retailer
Customer
Rs.413.40
28%
Manufacturer
Distributor
Retailer
Customer
Rs.204.50
62%
24
25
26
Yarn Spinning
[Korea]
QC & Shipping
[Hong Kong]
Weaving
[Taiwan]
Stitching
[Indonesia]
Zippers+
[Japan+]
27
chain?
What are inbound/outbound activities in supply
chain?
What about information and inventory? Are they
related in some way in supply chain?
28
CASE STUDY-1:
SCM COMPLEXITY
29
Scope / Activities
Supply Chain Management
Materials Management & Transportation
Manufacturing
Packaging
g g
Total Quality Management
Distribution Systems
30
10
Product Portfolio
Oral Care
Horlicks
Toothbrush
NHC
Aquafresh
Flex, FnD, FlexiKid
Boost
Viva
Maltova
Aquafresh mouthpaste
x-fresh,
f h Fn
F M
Biscuits
Hlx
Std
Jordan
Flexi friend
Eno
Boost
Ch.Hlx EB
Elaichi
Regular, Lemon,
Jaljeera
Crocin
Med
(c) R.Shankar (2010-11)
31
3 Factories
Nabha - Punjab
Rajahmundry - A.P.
Hamira - Punjab
SD1 Project
Sonepat - Haryana
32
7 Packing Sites
N
F
Faridabad (F)
Calcutta (C)
CG
Hyderabad (H)
Chennai (CH)
Nabha (N)
Hamira (HA)
Chittagong - Bangladesh (CG)
(c) R.Shankar (2010-11)
CH
33
11
2 Biscuit sites
Burdwan
Hyderabad
34
2 sites
Goa (Tooth Brush)
N hik (Toothpaste)
Nashik
(T th
t )
N
G
35
1 Site (ENO)
Hyderabad
36
12
Sales depots
37
Supply Complexities
Finished Goods Movement
250 vendors,
350 materials,
15 sites
P/S
P/S movement
of avg.. 1200 kms
Over 1000
consignments/
month shipped
across 130
site-depot
linkages
12 supply sites
catering to 37 markets
Supply Complexities
Export Supplies
Nepal
Bangladesh
Middle East
Myanmar
Mauritus
39
Sri Lanka
13
Third Party
Suppliers
Third Party
Manufacturing`
Factories
Captive
Malting
Bulk
Packing
Stations
Finished Goods
Depots
Export
Mkt..
Wholesalers
Retailers
40
MRP at
Sites
Delivery Schedules
to Supplier
Central Planner
Capture NRs
Send Aggregate Prod
Plan & Despatch
p
schedule to sites
Detailed Production
Scheduling at Sites
NRS: Net
Requirement
Stability
SKU - Monthly
PPR: Production
Plan
Requirement
SKU - Daily
Production / Packing
(c) R.Shankar (2010-11)
Dispatches
to depots
Performance Measurements
Factories
Supply
Plan
Adherence
(SPA))
(S
Procurement t
Quality
Supply Side
l
Demand Side
Depots
Projects
Wholesalers
Retailers
Net
Requirement
Stability
(NRS)
Exports
42
14
Major Problems
Forecast inaccuracy
Un-organised transport sector
Longer lead time for some raw materials
Frequent change
g in statuary
y requirements
Sales promotions disturbs the planning cycles
43
44
or to
t be
b out-sourced
t
d?
Least Product inventories
Third Parties:- Partners can add
significant value
(c) R.Shankar (2010-11)
45
15
46
47
Conflicting Objectives
in the Supply Chain
1. Purchasing
Stable volume requirements
Flexible delivery time
Little variation in mix
Large quantities
2. Manufacturing
Long run production
High quality
High productivity
Low production cost
48
16
Conflicting Objectives
in the Supply Chain
3. Warehousing
Low inventory
Reduced transportation costs
Quick replenishment capabilityy
4. Customers
Short order lead time
High in stock
Enormous variety of products
Low prices
49
Manufacturers
Distributors
Low inventory
Few DCs
Retailers
Few stores
Low inventory
Little variety
Close to DCs
Large shipments
Consumers
Convenience
Short lead time
Large variety of
products
50
Lean manufacturing
Outsourcing
Off-shoring
51
17
52
Lead time
Total cost
Management of Inventory
Material Handling
Performance Monitoring & Control
Sensitization about the Logistics cost to all the
stakeholders !
Information Sharing..
54
18
55
Cycle Time
Cost Management
Inbound, Operations
& Outbound
Alliances
Initiatives
Technology
Integration
Environmental
Pressures
57
634
19
country..
Lead
Time??
Integration??
I t
ti ??
Coordination??
Environmental
Issues??
58
20