Name of the Subject: Distribution & Supply Chain Management Course: MMS Sem: III Specialization: Marketing

Faculty: Prof. Parag Bhole.

Supply Chain Management

Essential Aspect of Business Today Consists of Managing the entire flow of information, materials & services from raw materials suppliers through factories & warehouses to the end customers. A supply chain refers to the way that the materials flow through different organizations, starting with raw materials & ending with finished products delivered to the ultimate customer.

Structure Of Supply Chain

SUPPLIER
MANUFACTURER FG STORAGE WHOLESALER/ DEALER (DISTRIBUTIONCENTER) RETAILER CUSTOMER

Raw Materials

Finished Goods
Information Flow

Figure 1

BASIC PURPOSE OF SCM

To control inventory by managing the flow of materials. To satisfy customer needs.

Fig 2. a Supply Chain for a Manufacturing Organization

.
Supplier A
Raw Materials Storage

Mfg

FG Storage

Wholesaler /Distributor

Retailer

Customer

Supplier B
Information Flow/Customer Feedback

Examples Britannia Company, Godrej Steel furniture, Sweets Mithai Shop, etc

BASIC PURPOSE OF SCM

To control inventory by managing the flow of materials. To satisfy customer needs.

Fig 2. b Supply Chain for a Service Organization

Supplier A

Storage

Service

Customer

Supplier B
Information Flow/Customer Feedback

Examples Hospitals, Maharashtra State Electricity Board, Railways, etc

Supply Chain Features

Includes movement of products, information, and funds in both directions Typical stages: suppliers, manufacturers, wholesalers/distributors, retailers and customers. (Fig 2. c) Also known as Supply networks or Supply webs.

Suppliers

Manufacturer

Distributors

Retailers

Customers

Fig 2. c

 Supply chains exist in both Manufacturing and Service

organizations, although the complexity of the supply chain

may vary greatly from industry to industry and firm to firm.

Supply Chain Management

A supply chain is a network of facilities and distribution options that performs the functions of procurement of raw materials, transformation of these raw materials into finished products, and the distribution of these finished products to customers.

Examples - Supply Chain Management

Below is an example of a very simple supply chain for a single product, where raw material is procured from vendors, transformed into finished goods in a single step, and then transported to retailers & salesmen, and ultimately, customers. Ex (1) Pickles manufactured by Bedekar & Kubal.

Ex (1) Supply Chain for Bedekar &Kubal Pickles Typical Supply Chain

Ex 2 Grocery Industry such as farm products has formed a partnership of manufacturers, wholesalers & retailers to implement efficient

customer response.

The basic objectives of this program are to manage both demand & supply chain. To maintain optimum inventory level, purchase dept, operations dept & marketing dept must have proper co ordination among them which can be achieved by integrated approach of SCM.

Supply Chain Management

There should not be individual objectives of the various departments of the organization. Clearly, there should be a

need for a mechanism through which overall objectives of

the organization can be integrated together. Supply chain management is a strategy/mechanism through which such

an integration can be achieved.

Measuring Supply Chain Performance

Three Measures of Supply Chain Performance are with respect to quality, delivery & cost:

1. Quality A direct measure of quality is

customer satisfaction, which can be measured as follows a. Fulfillment of Customer expectation

b. Asking customers various questions related to overall product experience, recommendation of the product to a friend for purchase of a product, repurchase of the product in future & loyalty to the brand.

Ex Godrej Furniture, Cadbury chocolate, Bisleri Water, Samsung TVs & other products, etc.

Measuring Supply Chain Performance

2. Delivery It refers to on time delivery, the percentage of orders delivered on the date requested by the customers.

ex Vijay Sales, Malls.

3. Cost It refers to total delivered cost, including manufacturing cost, distribution cost, inventory carrying cost & accounts receivables carrying cost.

Supply Chain Decisions

We classify the decisions for supply chain management into two broad categories -- strategic and operational. Strategic decision Operational decision

Strategic decisions are made over a longer time horizon. These are closely linked to the corporate strategy, and guide supply chain policies from a design perspective.
Operational decisions are short term, and focus on activities over a day-to-day basis. The effort in these type of decisions is to effectively and efficiently manage the product flow in the "strategically" planned supply chain.

Supply Chain Decisions

There are four major decision areas in supply chain management:

1. Location,

1. Location
Factors to be considered while selecting
location for mfg plant:

Primary Factors (a) Availability of cheaper raw materials

e.g. Steel plant near Jamshedpur, Aluminium plant near Coastal areas, Sugar making plant near sugarcane farm, Paper making plant near softwood forests.

(b) Availability of cheaper labor (c) Availability of cheaper power e.g. Aluminium plant needs more electricity, Making of Hydrogen & Oxygen from Water.

(d) Uninterrupted power supply e.g. chemical

products
(e) Finished Goods Transportation Facility

e.g. heavy finished goods. (f) Speed of transport for perishable goods.
e.g. Milk dairy. Secondary factors (a) Cost of land (b) Supply of water (c) Industrial peace (no strikes) (d) Attitude of local community (e) Infrastructural facilities

(f) Presence of supporting industries e.g. Alcohol making plant comes up near sugar factory, Grapevine making plant in Nashik.

(g) Government support e.g. tax concession in rural areas,

ban on union activities for first five years.

(h) Seismic zone considerations (no plant located in

earthquake affected areas). (i) Strategic consideration (location should not be easy target for the enemies. e.g. defense equipment making factory, power plants, oil refineries, etc.

2. Production,

3. Inventory (Raw Material & Finished Goods)

4. Transportation (distribution)
and there are both strategic and operational elements

in all four of these decision areas.

Inventory Decisions
These refer to means by which inventories are managed. Inventories exist at every stage of the supply chain as either raw

materials, semi-finished or finished goods. They can also be inprocess between locations. Their primary purpose is to buffer against any uncertainty that might exist in the supply chain. Since holding of inventories can cost anywhere between 20 to 40 percent of their value, their efficient management is critical in

supply chain operations. It is strategic in the sense that top

management sets goals.