Supply Chain Management For Mba

Supply Chain Management
- K C Manjunath
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What is an Industry ?
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Types of Industry ?
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Sectors in Industry ?
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Why people run Industry ?
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An overview of Industry
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An overview of Industry
Transportation
Factory
Warehousing
Transportation
Customers
Information
flows
Transportation
Vendors/plants/ports
Warehousing
Transportation
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Economy
Down ward trend since last 3-5 years
Expected same trend to continue till 2015
Infrastructure projects Held up / delayed
due to high cost of financing
Consumer spending reduced due to higher
interest rates
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Market
Limited / Reduced number of Business
Opportunities
Stiff competition
Customer is demanding low cost , faster
deliveries with improved Quality

Reduced Jobs
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How to run Industry

Efficiently ?
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Strategic Integration
Customer Expectation
Business Needs
Manufacturing Strategy
Supplier Relationship
Management
Sourcing Strategy
Financial Alignment
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Why Focus on Integrated approach

1)Customer expectations are moving in the direction
Increased Value Addition & Cost Consciousness
Response Time & Information Sensitivity
Need for Reliability
2)Increased competition forcing industries towards
Enhanced Performance / Quality
Reducing Lead Times
Reduce Cost
3)Change of attitude forcing industry managers
Need for Integration and Partnerships
Continuous Improvement of Processes
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Hence the Focus on

Supply Chain Management
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SCM
Overview of SCM
What is SCM?
Goal of SCM
Problems of SCM
Challenges and Objectives of SCM
Benefits of SCM
SCM Strategy
SCM Drivers
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An overview of supply chain
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Delivery of a superior value: Quality, flexibility,
innovation and value to the customer
Supplier's
supplier
Supplier
Buyer
Customer
Customers
Customer
Demand for low pricing, high quality, customer: supplier

Integration across a responsive and flexible supply chain
Value acquisition
from suppliers
Value added
Value delivered to customers
in production
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Supply Chain Constitutes Several

Flows
Physical Flow
Fiscal Flow
Information Flow
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The Supply Chain: from Original

Supply to Final Consumption
INFORMATION FLOW
Transfer
Transfer
Supplier
Manufacturing
Transfer
Distribution
Transfer
Retail Outlet
Consumer
CASH FLOW
Supply Chain Optimization
Increase Customer Responsiveness at Least Cost

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What is SCM ?
SCM is a set of approaches,
Efficiently integrate suppliers,
manufacturers, warehouses and
Customers,
Product is produced and distributed at
the right quantities, to the right
locations, and at the right time,
Minimize system wide costs while
satisfying customer service level
requirements
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Definition of SCM ?
Design of a system for operating &
monitoring
Flow of
material,services,finances,and
information From Earliest supplier
to the Ultimate customer through
out the supply chain in an effective
and efficient manner.
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Goal of SCM ?
Goal of Business is to make money
Goal of SCM is to increase the cash flow
speed by synchronizing business
processes based on constraints
Indexes of the management are neither
cost nor efficiency, which are traditional
accounting concepts, but throughput (item
flow), inventory, and expense aiming for
total optimization.
Supply chain management is a concept
that challenges the conventional
management
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Importance of SCM
Significant costs
Lengthening supply and distribution
lines
Competitive edge
Added customer value
Increasing demand of customers like
quick and customized response
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Objectives of a Supply chain

Enhancing Customer Service
Expanding Sales Revenue
Reducing Inventory Cost
Improving On-Time Delivery
Reducing Order to Delivery (Through Put Time)
Reducing Logistics cost
Reducing / Rationalize Supplier Base
Expanding Width / Depth of Distribution
Reducing working capital,
Accelerating cash-to-cash cycles,
Increasing inventory turns, and so on
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Objectives of a Supply chain

Improve organizations competitive position
Accomplish the purchasing and marketing
objectives at the lowest possible costs.
Provide uninterrupted flow of materials, supplies,
and services required to operate the organization
Supply chain profitability- Difference between
revenue generated from customer and the overall
cost across the supply chain
Achieving harmonious, productive working relations
with other functional areas within the organization
Keeping inventory at optimum level
Maintaining and improving quality
Developing & maintaining competent supply base.
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Challenges in Supply chain

Globalization of manufacturing
operation
Safety and quality products
Shorter lead time, less inventory and
better throughput
Supplier base consolidation
Access to latest technology
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Decisions in Supply chain

The strategic level
The tactical level
The operational level
Configuration of distribution
network
Inventory control
Distribution strategy
Supply chain integration and
strategic partnering
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Supply Chain Strategy
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The Extended Enterprise Supply Chain
Subassembly
Supplier
Raw
Material
Supplier
Assembly
Plant
Component
Supplier
Delighted
Customer
Dealer
Maximized value at minimized cost

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Competitive and Supply Chain

Strategies
Competitive strategy:
defines the set of customer needs a firm seeks to satisfy
through its products and services
Low cost, Rapid Response, Product Differentiation
Ex: Migros versus BIM
HP versus Dell
Supply chain strategy:

determines the nature of material procurement,
transportation of materials, manufacture of product or
creation of service, distribution of product
Consistency and support between supply chain

strategy, competitive strategy, and other functional
strategies is important !
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Traditionally, SC strategy includes
Suppliers Strategy
Operations Strategy
Logistics Strategy
Regarding
inventory, transportation, operating
facilities, information flows.
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Competitive and Supply Chain

Strategies
Product development strategy:
specifies the portfolio of new
products that the company will try to
develop
Marketing and sales strategy:
specifies how the market will be
segmented and product positioned,
priced, and promoted
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SCM - Strategic Integration
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Strategy formulation in SCM
Supplier Relationship
Management Strategy
Supply Chain
Strategy
Customer Relationship
Management Strategy
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Superior Business
Performance
Results in
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SCM Strategic Integration

Customer Expectation / Demand Planning
Business Needs
Product Development
Manufacturing Strategy
Supplier Relationship Management
Financial Alignment
Sustainability
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Strategy 1 Demand Planning

Based on real-time demand insights and demand shaping.
Right prediction and contingency planning for effective response
to risks such as suppliers going out of business, political
upheaval, and natural calamities affecting manufacturing.
Companies can adjust pricing and promotions strategies , move
additional product quickly, drive revenue growth, or expand
margins for a high-demand product with limited market supply.
Have foresight to leverage opportunities and mitigate challenges
so that your business not only survives, but succeeds.
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Strategy 2 Adopt Supply Chain

Build adaptive supply chain for rapid planning and integrated
execution
For better prediction of demand and risk, need to adapt supply
chains for changing market opportunities and events.
Put in place dynamic planning and continually fine-tune
operations.
old model was month / quarter end production and supply
based on shipments and sales.
New model calls for continuous, dynamic supply chain
adjustments for quick response to market changes to minimize
or even eliminate shocks across the supply network.
Results are better visibility; enhanced collaboration across the
value chain like sourcing, supply, manufacturing,
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transportation, warehousing & distribution and accelerated
Strategy 3 Product Design
Optimize product designs for supply, manufacturing, and

sustainability in order to accelerate profitable innovation
Innovation is crucial to being one step ahead of the competition.
In order to be successful, products must be manufactured at the right

cost.
Decisions in early cycles of product development can make or break
the product.
Product innovation and competitive advantage increasingly stem

from the selection of suppliers and technologies.
If company manages the information, people, processes, and

decisions regarding a product throughout its life cycle, it can achieve
strong dividends and market leadership.
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Strategy 4 Sales & OP
Align supply chain with business goals by connecting sales and

operations planning (S&OP) with corporate business planning
Though S & OP processes provide coordination among sales,

manufacturing, and distribution, there still are gaps among finance,
strategy, and operations in companies.
These gaps can be bridged with integrated business planning. This

integrates financial strategic budgeting and forecasting with operations
planning. The resulting processes ensures revenue goals and budgets
developed in finance are validated against a detailed, bottoms-up
operating plan.
This strategy reconciles the operating plan against financial goals.

Integrated business planning, connects S&OP processes with corporate
business planning, enables companies to achieve the right balance of
supply and demand, aligned with strategic business goals.
It provides real-time visibility to key dimensions for success -- demand,

supply, product, risk, and performance--across the organization and
throughout the extended SCM
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Strategy 5 Sustainability
Companies striving for social and environmental sustainability achieve
major competitive advantages, especially regard to production efficiency,
supplier management skills, and attractiveness to employees. Substantial
opportunities exist for sustainability in supply chain
Companies need to include sustainability as core component of their
supply chain strategy. This means incorporating it as a key requirement
across all supply chain processes.
Professionals initially should focus on the basics to achieve quick wins
through real-time visibility to energy and resource consumption and
resource or material movement. This enables reduction of carbon
inefficiencies, minimized energy consumption, less waste with "recyclereuse-refurbish"
Businesses can keep the momentum by ensuring continuous
improvement through systemic measurement, audit, and knowledge
management. Compliance audits, best practices, and benchmarks
provide a governing framework for sustainable supply chain operations
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Strategic Decisions in SCM

Strategy refers to a set of plan and
policies by which a company aims to
gain long-term competitive
advantage.
The number, location and size of
distribution centre
Terms and conditions of long-term
contracts with suppliers
Supply chain logistics
Selection of personnel
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Objectives of SCM strategies

To ensure that firm's operations and
supply chains excel on the performance
dimensions that are valued by the firms
targeted customers.
To ensure that the firms operations and
supply chain decisions are strategically
aligned with the firms business strategy.
To help in developing core competencies
in the firms operations and supply
chains.
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Guidelines in developing supply chain

strategy
Planning- What to achieve in supply chain process
Pro-activeness- New practices and technologies
Pattern of actions- Reveal the strategy of the firm
Portfolio of supply chain capabilities- Cost, quality,
delivery, performance
Programs of involvement- How to improve?
Performance measurement
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Guidelines in developing SC strategy

Start with customers' current and future needs (as
discussed above)
Assess current supply chain capabilities relative to
best in class
Evaluate supply chain "game changers" (what
megatrends will impact customers and the supply
chain?)
Analyze the competition (something too few do for
sure)
Survey technology - what is new or coming out
there?
Deal with supply chain risk - risk management
needs to be part of the strategy document
Develop new supply chain capability requirements
and create a plan to get
there
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strategy
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strategy
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Framework for Supply Chain

Strategy
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Aligning Supply Chain

Strategy with Business
Strategy
Business Objectives
Supply Chain
Objectives
Business
Strategy
Supply Chain
Strategy
Supply Chain
Processes
Importance to Top
Management
Focus of Top
Management
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Management
Processes
Strategic Supply Chain Alignment
Sourcin
g
Strategy
Demand
Flow
Strategy
Product
/
Custom
er
Service
Strategy
Supply Chain Integration Strategy
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Strategic Supply Chain Management

Manufacturing
Management
How should production be organized

and managed?
Sourcin
g
Strategy
Make or buy
Capacity
Management
Where should plants and suppliers

be geographically located and what
capacity should exist at each?
Which products /
components should be
manufactured and which
should be purchased ?
Key Elements of Sourcing Strategy

July 2014
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Demand Planning
What level of production and

inventory should be maintained to
meet customer demand?
Demand
Flow
Strategy
Channel Design
Supply Chain
Configuration
What is the optimal number, role,

location and linkage of each supply
chain participant?
What channel structure(s)

meets customer
expectations more
profitably?
Key Elements of demand flow strategy

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Revenue
Management
How should we respond to customer

expectations to maximize market
share and / or pricing margins?
Product
/
Custom
er
Service
Strategy
Customer Service
Segmentation
Cost-to-serve
What is the cost of responding to the

service expectations of each
customer segment?
What levels of
service does each
customer segment
expect ?
Key Elements of customer services strategy

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Supply chain strategy - Benefits
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Drivers of Supply Chain Performance

Competitive Strategy
Efficiency
Responsiveness
Supply Chain
Structure
Inventor
y
Transportatio
n
Facilities
Drivers
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Informatio
n
Drivers of Supply Chain

Performance
Inventory
Transportation
Facilities
Information
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Supply Chain Drivers

Logistical
1. Inventory
2. Transportation
3. Facilities
Cross functional
1. Information
2. Sourcing
3. Pricing
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Supply Chain Drivers

Inventory
raw materials, WIP, finished goods within a supply chain
inventory policies
Transportation
moving inventory from point to point in a supply chain
combinations of transportation modes and routes
Facilities
places where inventory is stored, assembled, or fabricated
production sites and storage sites
Information
data and analysis regarding inventory, transportation, facilities
throughout the supply chain
potentially the biggest driver of supply chain performance
Sourcing
functions a firm performs and functions that are outsourced
Pricing
Price associated with goods and services provided by a firm to the supply
chain
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Inventory
WHAT -Raw materials, work in process, finished
goods, and supplies required for creation of a
company's goods and services. The number of
units and/or value of the stock of goods held by a
company.
WHY- Exists because of mismatch in demand and
supply and to support a firms competitive
strategy.
IMPACT Throughput Time
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Inventory
Why hold inventory?
Unexpected changes in customer demand (always
hard to predict, and uncertainty is growing)
Short product life cycles
Product proliferation
Uncertain supply
Quantity
Quality
Costs
Delivery time
What if there was no uncertainty in supply or
demandwould it still be necessary to hold
inventory?
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Inventory
Role in the supply chain
Role in the competitive
strategy
Components of inventory
decisions
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Role in competitive strategy
If responsiveness is a strategic
competitive priority locate larger
amount of inventory closer to
customers.
If cost is more important , inventory
can be reduced to gain efficiency .
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Inventorys Impact
Inventory can increase amount of demand that can be
met by increasing product availability.
Inventory can reduce costs by exploiting economies of
scale in production, transportation, and purchasing.
Inventory can be used to support a firms competitive
strategy. More inventory increases responsiveness, less
inventory increases efficiency (reduces cost).
Inventory can significantly affect material flow/cycle/
throughput time.
Littles law: Inventory = flow time x throughput rate.
In other words: If you move your inventory faster, you
dont need as much inventory (inventory velocity)
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Components of Inventory Decisions

Cycle inventory
Average amount of inventory used to satisfy demand between shipments
Depends on lot size
Safety inventory
inventory held in case demand exceeds expectations
costs of carrying too much inventory versus cost of losing sales
Seasonal inventory
inventory built up to counter predictable variability in demand
cost of carrying additional inventory versus cost of flexible production
Pipeline Inventory
Work-in process of transit
Inventory held to do business
Overall trade-off: Responsiveness versus efficiency

more inventory: greater responsiveness but greater cost
less inventory: lower cost but lower responsiveness
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Drivers
Demand Variation/ forecast
accuracy/demand planning
Supply Planning Demand & Supply
synchronization
Service levels
capacity
Lot sizes/order sizes
Lead times
Speculation
Customer service level segmentation
Network Design
Data Accuracy
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Inventory Related Metrics

Average inventory
Products with more than a specified
no of days of inventory
Average replenishment batch size
Average safety inventory
Seasonal inventory
Fill rate
Fraction of time out of stock
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Transportation
Transportation moves the product
between different locations in a
supply chain
Transportation is prominent in a
company's competitive strategy
Faster transportation makes supply
chain more responsive
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Transportation
Role in the competitive strategy
Components of transportation
decisions
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Transportation: Role in the Supply Chain
Moves the product between stages

in the supply chain
Impact on responsiveness and
efficiency
Faster transportation allows greater
responsiveness but lower efficiency
Also affects inventory and facilities
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Transportation: Role in the Competitive Strategy
If responsiveness is a strategic
competitive priority, then faster
transportation modes can provide
greater responsiveness to customers
who are willing to pay for it
Can also use slower transportation
modes for customers whose priority is
price (cost)
Can also consider both inventory and
transportation to find the right balance
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Transportation Decisions
Mode of transportation:
air, truck, rail, ship, pipeline, electronic transportation
vary in cost, speed, size of shipment, flexibility
Route and network selection

route: path along which a product is shipped
network: collection of locations and routes
In-house or outsource
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Components of transport decisions
Design of transportation network

Choice of mode of transportation
Load Factor
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Metrics
Average inbound transportation cost: cost of
bringing product into a facility as percentage of
sales or cost of goods sold.
Average incoming shipment size: average number
of units or dollars in each incoming shipment at a
facility.
Average inbound transportation cost per shipment:
average transportation cost of each incoming
delivery.
Average outbound transportation cost: average
number of units or dollars in each outbound
shipment at a facility.
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Transportation: Role in the Competitive Strategy
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Facilities
the where of the supply chain
manufacturing or storage (warehouses)

economies of scale (efficiency priority)
larger number of smaller facilities
(responsiveness priority)
Example 3.1: Toyota and Honda
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Components of facilities decision

Location- Centralize or decentralize,
Characteristics of locations
Capacity- Excess capacity or little
excess capacity
Operations methodology- Product focus
or functional focus, Flexible or dedicated

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Facility related metrics
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Facility related metrics

Capacity
Utilization
Production cost per unit
Theoretical flow/cycle time of production
Actual average flow/cycle time
Flow time efficiency
Product variety
Processing/set up/down/idle time
Quality losses
Average production batch size
Production service level
Cost of number, location, and type of facility and level of responsiveness
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Information
It consists of data and analysis
concerning facilities, inventory and
transportation.
It is the biggest driver of performance.
Presents management with the
opportunity to make supply chain more
responsive and efficient.
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Information
Components of information decisions
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Information: Role in
the Supply Chain
The connection between the various stages in the
supply chain allows coordination between stages
Crucial to daily operation of each stage in a supply
chain e.g., production scheduling, inventory levels
An information system can enable a firm to get a high
variety of customized products to customers rapidly
An information system can enable a firm to
understand changing consumer needs more quickly
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Information:
Role in the Competitive Strategy
Allows supply chain to become more
efficient and more responsive at the
same time (reduces the need for a
trade-off)
Information technology
What information is most valuable?
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Components of Information
Decisions
Push (MRP) versus pull (demand information transmitted
quickly throughout the supply chain)
Coordination and information sharing
Forecasting and aggregate planning
Enabling technologies
EDI
Internet
ERP systems
Supply Chain Management software
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Information related metrics

Forecast horizon
Frequency of update
Forecast error
Seasonal factors
Variance from plan
Ratio of demand variability Vs order
varaibility
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Trade Off: Responsiveness VS

efficiency
Improves Responsiveness and efficiency.
Improves performance of other drivers.
Accurate information can help a firm
improve efficiency by decreasing inventory
and transportation costs.
Improves responsiveness by matching
supply and demand.
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Impact on E-commerce
Cost Efficiency
Changes in the distribution system
Customer orientation
Shipment Tracking
Shipping Notice
Shipping Documentation and labeling
Online Shipping inquiry
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Sourcing
Components of sourcing decisions
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Sourcing: Role in the Supply Chain

Set of business processes required to
purchase goods and services in a
supply chain
Supplier selection, single vs. multiple
suppliers, contract negotiation
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Sourcing: Role in the Competitive

Strategy
Sourcing decisions are crucial because
they affect the level of efficiency and

responsiveness in a supply chain
In-house vs. outsource decisions-
improving efficiency and

responsiveness
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Components of Sourcing Decisions

In-house versus outsource decisions
Supplier evaluation and selection
Procurement process
Overall trade-off: Increase the
supply chain profits
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Pricing
Components of pricing decisions
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Pricing: Role in the Supply Chain

Pricing determines the amount to
charge customers in a supply chain
Pricing strategies can be used to
match demand and supply
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Pricing: Role in the Competitive

Strategy
Firms can utilize optimal pricing
strategies to improve efficiency and
responsiveness
Low price and low product
availability; vary prices by response
times
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Components of Pricing Decisions

Pricing and economies of scale
Everyday low pricing versus high-low
pricing
Fixed price versus menu pricing
Overall trade-off: Increase the firm
profits
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Case Study - Walmart
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Key Factors
Pricing
Logistics
Inventory
Transportation
Facilities
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Pricing
Walmart practices every day low
pricing (EDLP) for its products.
Customer demand stays steady and
does not fluctuate with price
variations.
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Inventory
Walmart set up its own satellite
communication system in 1983.
Allows the management to monitor each and
every activity at any point of day.
Allows stores to manage their own stock.
The order management and store
replenishment of goods are entirely executed
with the help of computers through the
Point-of-Sales (POS) system.
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Transportation
Involves fast and responsive
transportation system.
More than 7000 company owned
trucks services the distribution
centers.
Shipping of goods to stores within 2
days.
Use idea of Back-Hauling
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Facilities
There are 140 Walmart distribution centres within
US.
Walmarts distribution centers by Facility type:
Regional General Merchandise Distribution
Centers.
Import/Redistribution Centers
Fashion Distribution Centers
Full line Grocery and perishables Food Distribution
Centers
Speciality Distribution Centers
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Cross Docking
Finished goods are directly picked up
from the manufacturing site of
supplier, sorted out and directly
supplied to the customers.
Reduces handling and storage of
finished goods
System shifted from supply chain to
demand chain
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Information
Use of bar codes and RFID to label different
products, shelves and bins in the center.
Use of handheld computer (Magic Wand)
Use of computers to track movement of goods
and stock levels.
Order management and store replenishment of
goods is entirely executed with the help of
computers through Point of Sale (POS) system.
Use of centralized Inventory database
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Case Study TATA NANO
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Case Study Tata Nano

The secret of designing the Tata Nano is a
concept called Target Pricing or Target Costing.
Once the features and functions are finalized
target costs are assigned to each and every
component/system transmission system,
instruments, engine, body, interiors, electrical
systems.
The sub-teams then design the
components/systems within the target cost.
They look at every bolt and nut and keep
driving cost out of the components/ system.
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Case Study Tata Nano

Truck utilization can be improved by using truck
optimization software. Similarly, warehouse space
can be utilized more efficiently by increasing
storage height- by increasing the rack heights or
having a mezzanine.
On a strategic level, Supply Chain Network Design
- locating plants, contract manufacturers,
Distribution Centre and warehouses- is important
because 70% of the cost of a supply chain is fixed
at the design stage.
So while Tata Nano has created a breakthrough in
car manufacture by reducing the cost of a car
significantly, it has led me to think about doing a
Tata Nano with my supply chain.
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Conclusion
Lower product costs
Reduced inventory carrying costs
Improved in-store variety and
selection
Highly competitive pricing for the
consumer
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Strategic Fit And Scope

Competitive and Supply chain strategies
Achieving strategic fit
Expanding strategic scope
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Achieving Strategic Fit

What is strategic fit?
How is it achieved?
Other issues affecting strategic fit
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Achieving Strategic Fit

Strategic fit:
Consistency between customer priorities
of competitive strategy and supply chain
capabilities specified by the supply
chain strategy
Competitive and supply chain strategies
have the same goals
A company may fail because of a

lack of strategic fit
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How is Strategic Fit Achieved?

Step 1: Understanding the customer
and supply chain uncertainty
Step 2: Understanding the supply
chain capabilities
Step 3: Achieving strategic fit
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Step 1: Understanding the Customer

and Supply Chain Uncertainty
Identify the needs of the customer
segment being served by the
following attributes:
Quantity of product needed in each lot
Response time customers will tolerate
Variety of products needed
Service level required
Price of the product
Desired rate of innovation in the product
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Step 1: Understanding the Customer

and Supply Chain Uncertainty
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Impact of Customer Needs on Implied

Demand Uncertainty strategic fit
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Step 2: Understanding the

Supply Chain
How does the firm best meet demand?
Dimension describing the supply chain
responsiveness
Supply chain responsiveness -- ability to
respond to wide ranges of quantities
demanded
meet short lead times
handle a large variety of products
build highly innovative products
meet a very high service level
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Step 3: Achieving Strategic Fit

To ensure that what the supply chain
does well consistent with target
customers needs
Uncertainty/Responsiveness map
Zone of strategic fit
Examples: Dell
July 2014
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Responsiveness Spectrum
Highly
efficient
Integrated
steel mill
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Somewhat
efficient
Hanes
apparel
Somewhat
responsive
Most
automotive
production
SCM by KCM
Highly
responsive
Dell
Achieving Strategic Fit Shown on the

Uncertainty/Responsiveness Map
Responsive
supply chain
of it
e
F
n
Zo egic
t
ra
t
S
Responsiveness
spectrum
Efficient
supply chain
Certain
demand
July 2014
Implied
uncertainty
spectrum
SCM by KCM
Uncertain
demand
Step 3: Achieving Strategic Fit

All functions in the value chain must support
the competitive strategy to achieve strategic
fit
Two extremes: Efficient supply chains (Barilla
food chain) and responsive supply chains (Dell)
Two key points
there is no right supply chain strategy
independent of competitive strategy
there is a right supply chain strategy for a
given competitive strategy
July 2014
SCM by KCM
Comparison of Efficient and

Responsive Supply Chains
Efficient
Responsive
Primary goal
Lowest cost
Quick response
Product design strategy
Min product cost
Modularity to allow
postponement
Pricing strategy
Lower margins
Higher margins
Mfg strategy
High utilization
Capacity flexibility
Inventory strategy
Minimize inventory
Buffer inventory
Lead time strategy
Reduce but not at expense

of greater cost
Aggressively reduce even if

costs are significant
Supplier selection strategy
Cost and low quality
Speed, flexibility, quality
Transportation strategy
Greater reliance on low cost

modes
Greater reliance on
responsive (fast) modes
July 2014
SCM by KCM
Obstacles to Achieving Strategic Fit

Increasing variety of products
Decreasing product life cycles
Increasingly demanding customers
Fragmentation of supply chain
ownership
Globalization
Difficulty executing new strategies
July 2014
SCM by KCM
Challenges in achieving Strategic Fit

Multiple products and customer
segments
Product life cycle
Competitive changes over time
July 2014
SCM by KCM
Multiple Products and Customer

Segments
Firms sell different products to different
customer segments (with different implied
demand uncertainty)
The supply chain has to be able to balance
efficiency and responsiveness given its
portfolio of products and customer segments
Two approaches:
Different supply chains if the segments are large
enough
Tailor supply chain to best meet the needs of each
products demand ,
July 2014
SCM by KCM
Product Life Cycle

The demand characteristics of a product and the needs of a
customer segment change as a product goes through its
life cycle
Supply chain strategy must evolve throughout the life cycle
Early: uncertain demand, high margins (time is important),
product availability is most important, cost is secondary
Late: predictable demand, lower margins, price is
important
Examples: pharmaceutical firms, Intel
As the product goes through the life cycle, the supply chain
changes from one emphasizing responsiveness to one
emphasizing efficiency
July 2014
SCM by KCM
Competitive Changes Over Time

Competitive pressures can change over
time
More competitors may result in an
increased emphasis on variety at a
reasonable price
The Internet makes it easier to offer a
wide variety of products
The supply chain must change to meet
these changing competitive conditions
July 2014
SCM by KCM
Expanding Strategic Scope

Scope of strategic fit
The functions and stages within a supply chain
that devise an integrated strategy with a
shared objective
One extreme: each function at each stage
develops its own strategy
Other extreme: all functions in all stages
devise a strategy jointly
5 Categories:
Intra-company intra-operation scope
Intra-company intra-functional scope
Intra-company inter-functional scope
Inter-company inter-functional scope
Flexible inter-functional scope
July 2014
SCM by KCM
Different Scopes of Strategic Fit

Across a Supply Chain
Suppliers Manufacturer Distributor
Retailer
Customer
Competitive
Strategy
Product
Development
Strategy
Supply Chain
Strategy
Marketing
Strategy
July 2014
Intercompany
Interfunctional
Intracompany
Interfunctional
at Distributor
SCM by KCM
Intracompany
Intrafunctional
at Distributor
Intracompany
Intraoperation
at Distributor
Sourcing Strategy
The existing systems and metrics are

inadequate to meet evolved supply
chain requirements
Supplier
Supply
Manufacturer
Distributor
Store
Consumer
Convertsion
Delivery
Customers
End User
Cost
Quality
Delivery
Buyer Time Analysis
Multiple
Supplier
s
Multiple
Factorie
s
Multiple
Routes
to
Market
Cost Quality Delivery &

Flexibility Innovation Time to
Market
Buyer Time Analysis
Purchasing strategic terms

& capital items
2%
Negotiating long term
Sourcing
contracts
8%
Performance monitoring of
Buying / ordering
suppliers
Achieving small base, all
28%
certified
Requisition
No ofPOs
per buyer was a key metric
Supply reliability
is a key performance m
Vendor Analysis
8%
Traditional Planning Approach

Characterized by Sequential, Decomposed, Slow
Procurement
(Material)
Manufacturing
(Capacity)
Sales & Distribution

(Demand)
C
U
S
T
O
M
E
R
Optimize to
Mfg objectives
Optimize to
Logistics obj
Optimize to
Sales & Mktg obj
Strategic Sourcing
To minimize supply risk & reduce unit cost
Decide procurement strategy based on
Spend Analysis
Item Classification
Supply market Analysis
Cost behavior
Supplier Rationalization & Single source

risk reduction as a continuous process
To reduce linkage reduction / Tierisation.
Identify opportunities for Supply Risk
minimization & cost reduction.
19.06.2006
Supply Chain
SCM Sourcing Strategy

Sourcing Roadmap
Spend Analysis
Strategic , Bottleneck, Leverage , Routine
items ..
Analyze where to Focus

Analyze Supply Market
Analyze pricing factors
Strategic Sourcing Roadmap

Conducting spend analysis is the first step in the strategic
sourcing process
Conduct
Spend Analysis
Determine Business
Requirements and
identify focus areas
Conduct Market
Analysis- Supply
and Pricing
Develop
Item-category
Strategy
Select
Supplier &
Negotiate
Plan
Transition
Spend Analysis
Evaluate each items on 2 parameters:
Supply Risk/ Complexities and Business Impact
The result of spend analysis is Procurement Portfolio
Matrix.
Bottleneck Item
High
Supply risk /
complexity
Low value
with high
exposure
Routine Items
Strategic Items
High cost
with high
exposure
Leverage Items
Low value
and low
exposure
High cost
with low
exposure
Low
Low
Business Impact
High
Identify focus areas
Items with high unit price is an area of focus of cost reduction

while others with high purchase frequency and low unit price
is subject for automation.
(1) Spend Analysis(2) Identifying Focus Area
High
Focu
s
Items for Concentration of

Procurement Activity
Cost Reduction
Purchasing
Unit Price
Items for Reducing Effort of
Low
Low
Purchasing Frequency
High
Process
Simplification
Supply Market Analysis

Supply market analysis aims to get the
overall market perspective for an item into
the strategy formulation.
(1) Spend Analysis (2) Identifying Focus Area
Low
(3) Supply
Market Analysis
Focus
Collabora
te
Suppli
er
Market
Equilibrium
Buyer
Market
High Demand > SupplyDemand = Supply
Start-up
Demand < Supply
Development
Mature
Material Lifecycle
Phase-out
Leverage
Competitio
n

It is very important to understand the buyer- supplier
relationship and the kind of dependency which exist
between them.
A product which lies in Buyers market, but suppose
one buyer is only offering 1% market to suppliers
while another buyer is having requirements close to
30-40% of the available market capacity. Now in such
a case the buyer with large requirements will
command a bargaining power vis a vis the buyer with
very low requirement.
Based on the mutual dependency matrix, there could
be four types of suppliers:
Leverage suppliers
Strategic suppliers
Bottleneck suppliers
173
Non critical suppliers

For selected key categories, we may also
wish to look at mutual dependency of
buyer
and suppliers.
Bottleneck suppliers
Suppliers dependence on
us
High
Low
Low
Increase attractiveness of
account
Aggregate to provide as much
leverage as possible
Increase supplier base to
minimize risk
Non Critical suppliers
Use of e-bidding/ Reverse
auctions
Low cost of acquisitions
Volume leverage
Strategic suppliers
Close relationships
Information sharing
Joint development
Price and cost analysis
Leverage suppliers
Vendor managed inventory
Usage driven
replenishment
Pay as per use
Reverse auctions
Our dependence on supplier
High
Strategic Sourcing
Pricing Factor Analysis
Pricing factor analysis aims to bring in the price
behavior of an item in the overall strategy
(4) Pricing
Factors Analysis
formulation
Price volatility determines the kind of focus required for different group of items
Focu
s
High
Items with
volatile price
Price
Volatility
Low
175
Low
Items with
Stable
Price
Reduce Risk
Items with
potential
price
change
Import dependence
Contracts/
Relationships
High
Strategic Sourcing Roadmap
High
Bottleneck, Strategic
(2) Analyze Where

to concentrate
High
Concentration of
(3) Analyze Supply

Market
High
Control
on
pricing
and
Routine, Leverage
Reduce Effort ofsupplies
Procurement Activity Low
Low
Low
Low Business ImpactHigh
Low
Frequency How Start-up Dev.
Supply Risk/
Importance
Bottleneck
Strategic
Routine
Leverage
Unit
Price
Items for
procurement
effort
concentration
Items to
reduce
procurement
effort
(4) Analyze Pricing

Factors
High
Suppliers
Market
Eq
ui
lib
ri
um
(1) Spend
Analysis
Items with
volatile price
Price
Volatility
Items with
Items with
potential
Buyers
Stable
price
Market
Price
change
Low
Mature PhaseLow Percentage of High
out
Imported matl
Items in
Suppliers
market
Items with
volatile price
Items in
Equilibrium
market
Items with
potential price
change
Items in Buyers
market
Items with
stable price
Sourcing
Components of sourcing decisions
177
Sourcing: Role in
the Supply Chain
Set of business processes required to
purchase goods and services in a
supply chain
Supplier selection, single vs. multiple
suppliers, contract negotiation
178
Sourcing:
Sourcing decisions are crucial
because they affect the level of
efficiency and responsiveness in a
supply chain
In-house vs. outsource decisionsimproving efficiency and
179
Sourcing:
Firms can utilize optimal pricing
strategies to improve efficiency and
responsiveness
Low price and low product
availability; vary prices by response
180
Components of Sourcing Decisions

In-house versus outsource decisions
Supplier evaluation and selection
Procurement process
Overall trade-off: Increase the supply
chain profits
181
Supply Chain Processes in a Firm

Customer Relationship ManagementCRM
Internal Supply Chain ManagementISCM
Supplier Relationship Management182
CRM
Market
Sell
Call Center
Order Management
183
ISCM
Strategic Planning
Demand Planning
Supply Planning
Fulfillment
184
SRM
Source
Negotiate
Buy
Design Collaboration
Supply Collaboration
185
Procurement
SCM Procurement
Traditional
Tactical
Strategic
Negotiation
Group Buying
ARC
Procurement as a Supply Chain

Process
The supply chain consists of value
chain processes through which raw
materials and products move from
suppliers to final consumers.
Suppliers
Procurement
Production
Distribution
Customers
Procurement Environment
Requirements
Purchase Order
Vendor
invoice
8. Payment
1. determination
2.
Source
determination
RUHR
TRUCKING
7. Invoice verification
3. Vendor selection
6. Goods receipt and
inventory management
5. Order follow-up
4.
Order Processing
Evolving Model of Procurement
In the traditional organization, the procurement

function is generally viewed as a staff or support
function. In contrast, procurement in progressive
organizations is viewed as a strategic function - i.e., a
key contributor to the enterprises profitability and
competitiveness
Traditional
Strategic
Tactical
Tactical Emphasis
Acquisition Cost Focus
Staff Function
Cost Center
Reactive
Progressive
Strategic
Tactical
Strategic Emphasis
Total Cost Focus
Profitability Center
Proactive
The opportunities for value enhancement

through procurement is significant
Revenue
AA5%
5%
reduction
reductionin
in
purchase
purchasecost
cost
can
canresult
resultin
inaa
50%
50%increase
increase
in
inprofit
profit
margin
margin
In
Inorder
orderto
to
obtain
obtainan
an
equivalent
equivalent
impact,
impact,aa
company
company
would
wouldhave
haveto
to
100
100
Profit
7.5
Other
Costs
45
External
Expenditures
50
0%
45
47.5
Increase sales by 50%

Reduce overheads by up to 20%
Significantly reduce staff numbers
DESIGNING THE SUPPLY CHAIN

Seamless supply chains to have
excellent coordination among members;
compatible information systems;
outstanding communication;
little waste and few environmental issues;
minimal inventories;
exceeded customer and supplier
expectations;
meet or exceed profit expectations.
SUPPLY CHAIN CYCLES

CUSTOMER ORDER CYCLE
CUSTOMER
REPLENISHMENT CYCLE
DEALER / RETAILER
B2B CUSTOMER ORDER CYCLE
PROCUREMENT CYCLE:
SUPPLIERS
DISTRIBUTOR /
WHOLESALER
MANUFACTURER
SUPPLY CHAIN: MAJOR DECISIONS

EFFICIENT
SUPPLY CHAIN
RESPONSIVE
SUPPLY CHAIN
Primary goal
Lowest supply cost
Quick response to
demand
Product design
Maximum performance
at minimum cost
Modularity for product

line additions and
rollouts
Pricing
Lower margins - price is Higher margins - price

seen as a prime driver is not a prime driver
Manufacturing
High utilization provides Flexibility to capitalize

low costs
on opportunities
SUPPLY CHAIN: MAJOR DECISIONS

EFFICIENT
SUPPLY CHAIN
RESPONSIVE
SUPPLY CHAIN
Inventory
Minimized
Ample not excessive

safety stocks exist
Lead time
Reduce only as costs

permit
Reduce aggressively
even with some cost
increases
Suppliers
Select based on cost and Select based on speed,

quality
flexibility, reliability,
quality, and the ability to
integrate with your
systems
OUTSOURCING
Outsourcing is the process of moving
an aspect of production, service, or
other business function from within an
organization to an outside supplier.
By outsourcing non-strategic
processes an organization can focus its
attention on its primary business[core]
and maximize customer satisfaction.
TYPES OF OUTSOURCING
a third-party makes an assembly, component, or

finished product for another company.
a supplier that provides some or all logistics

activities.
Offshoring
outsourcing a function to a different country.
Business Process Outsourcing [BPO]
outsourcing support functions such as:
housekeeping, payroll, uniforms, This is
frequently included in with 3PLs.
BENEFITS OF OUTSOURCING
Frequently cited benefits include:
Reduce operating expenses
Focus on the core business
Create a variable cost structure
Improve skills due to business focus
Concentrate on increasing revenue
Conserve or more effectively utilize capital
Increase innovation
Improve quality
OUTSOURCING RISKS
Outsourcing the wrong [core or strategic]
functions may interfere with the operation
of an entity and may cause a long-term
loss of competitive position.
Outsourcing risks
Strategic risk is long-term risk
Tactical risk is short-term risk
OUTSOURCING RISKS
STRATEGIC RISK result
TACTICAL RISK result
Lose the knowledge to internally

perform the function or master the
technology can not keep up with
competitive technology levels
A short-term supply disruption

customer shipments are delayed
Supplier has, or develops, unique

capabilities technology protected
by patents and / or trade secrets
causing you to lose bargaining
power
Supplier takes short-cuts to

increase speed of production and /
or decrease quality without your
approval increased number of
bad parts,
OUTSOURCING BY TYPE:
CONTRACT MANUFACTURING
Contract manufacturing uses one or
more selected suppliers to provide a
product and/or service for the
customers specific needs.
It involves
a contract,
extensive coordination,
specifications [product, packaging, and
quality], and
possibly new product development activities.
OUTSOURCING BY TYPE:
3PL EXAMPLES
Transportation Tracking, tracing, dispatch, freight
payment, contract management
Warehousing
Cross-docking, shipment merging,

pick and pack operations, kitting,
inventory control, order fulfillment,
catalog fulfillment, internet order
delivery
Other 3PL
services
Customs brokering, freight forwarding,

export crating and consolidation, order
taking, insurance claims, freight bill
auditing, consulting services
OUTSOURCING BY TYPE: 3PL

PRIMARY REASONS FOR SELECTING A 3PL
REDUCE COST
Reduce operating costs
Reduce capital investment
INCREASE COMPETENCY FOCUS
Focus on core business
Gain access to technology not in firm
INCREASE REVENUE
Increase flexibility and responsiveness
Increase speed to market

HOW SHOULD I SELECT A 3PL?
-Some general items to evaluate
Price competitiveness
Evaluate on a total system cost
basis not a piece price basis
Financial stability
Experience in the same industry or
with similar companies or products

Quality
Service quality and performance [Six Sigma,
ISO 9000, Malcom Baldridge [NIST],
Six Sigma [defects per million]
Six Sigma Defects
2
308,537
?
3
66,807
25-40%
4
6,210
15-25%
5
233
5-15%
6
3.4
<1%

Quality [continued]
Quality of the suppliers management
team
Client Relationship
Availability of top management
Service cancellations, delays, and / or
interruptions
General reputation
Human resource policies and availability
of qualified talent
MANUFACTURING PROCESSES:
BATCH
The equipment can make a variety of
products in a class based on its capability.
An optimal batch size is determined.
Products are run in a sequence to optimize
the process [as much as possible].
Capacity can generally be added in a
reasonable time frame.
FLOW
The equipment runs at a [fast]

steady rate.
The lead time is short with
continuous production.
LEAN PRODUCTION
Lean production is aimed at the elimination of
waste in every area of production including
customer relations, product design, supplier
networks and factory management. Its goal is to
incorporate less human effort, less inventory,
less time to develop products, and less space to
become highly responsive to customer demand
while producing top quality products in the most
efficient and economical manner possible.
Toyota was a pioneer and realized enormous cost

savings.
LEAN PRODUCTION PRINCIPLES
Managerial Responsibility
Managers must be teachers, team
facilitators, and motivators.
Process Development
Line workers are trained to
Improve processes, and
Solve problems
Network Orientation
Lean should be practiced by
LEAN PRODUCTION PRINCIPLES
Synchronization
Coordination of material movement is
accomplished
Developed by Toyota Corporation to
signal when parts needed to be
withdrawn from inventory or a feeding
operation [like a supply bin] and leave
a visible record of its withdrawal.
Continuous Improvement
Continuous improvement comes through
productivity gains and innovation
JIT
Kanban/
Two bin
Flow
Quality
assurance
Visual
Control
Maintenance
Smoothened
Production
5S
SMED
Operating
stds.
Multi skills
Poka Yoke
5S
Seiri
Seiton :Orderliness
:
Proper arrangement
Sort, Identify what is necessary and discard what is
unnecessary
Everything should have a place and everything in its
place
Seiso
Seiketsu
Shitsuke :Discipline
:Cleanliness
Keep the workplace spotless
:Cleanup
Maintain equipment and tools
Standardise and stick to the rules
5S is the fundamental requirement for

making things visible
WHY GOOD HOUSEKEEPING ?

A neat and clean factory
Produces fewer defects
Has higher productivity
Is a safer place to work
Promotes a sense of well-being
and improves morale.
Clutter hides problems.
Point No. 08
Unit: Vehicle Unit
Resp: RV
Poor / Fair
Point No. 08
Unit: Vehicle Unit
Resp: RV
Poor / Fair
Point No. 20
Unit: Engine Unit
Resp:MN
Poor / Fair
Point No. 20
Unit: Engine Unit
Resp:MN
Poor / Fair
Press tools in designated area
Storage of gauges in Quality
Storage of files
What is JIT ?
Man
Machine
Material
Method
Right Product
Just
Right quality
In
Time Right Time
JIT is popularly known as an inventory

control method where finished goods are
made with minimum inventory
Just-In-Time is.
A Manufacturing system which produces :
What the customer wants
In the quantity the customer wants
When the customer wants
While using the minimum of
Raw Materials
Equipment
Labour
Space
There is a focus on Waste Elimination and Lead time reduction
this would be the criteria for measuring the results of JIT efforts
1.
JIT Ten Commandments
Throw out traditional concepts of manufacturing

methods
1. Think of how the new method will work; not how it wont
1. Dont accept excuses. Totally deny the status quo.
1. Dont seek perfection; A 50% implementation rate is
fine as long as
it is implemented o the spot
1. Correct mistakes the moment they are found
1. Dont spend more money on innovations
1. Problems give you a chance to use your brain
1. Ask Why five times
2. Ten persons ideas are better than one persons
Kanban
1.
2.
3.
4.
Remove Kanban from last bin of stack and

place on hook
Trigger signal to Supplier at fixed frequency

Print kanban report at centralized location
6.
Handover to driver with 2 copies for each
supplier in the cluster
Collect only as per kanban report

Receive Parts from Supplier, inspect(non skip)
Place the part in chute with kanban in bottom
bin of the stack
Containerization
Cost saving
Rs.11 lakhs/annum
Man power saving

8 man-hours/day
Cost saving achieved
Containerization
Rs.28 lakhs/annum
Expected Man power saving

32 man-hours/day
INNOVATION CYCLE
ACT
PLAN
CHECK
DO
IMPROVEMENT
CYCLE
KAIZEN
INNOVATION CYCLE
KAIKAKU
CHEC
K
IMAG
E
VISION /
PICTURE /
DREAM
Use KAIKAKU in place of KAIZEN

KAIZEN
(Continuos improvement)
KAIKAKU
(Innovation)
Small change
Big change
making better
Revolution
Inventory Control & Management
FSN Analysis
F Fast moving
S Slow moving
N Non moving
F Continuous usage weekly / monthly
S Transactions 6 months 24 months
N No transactions > 24 months
Application varies from Industry to Industry
Inventory Turnover method

It means how many times a companys
inventory is sold and replaced (finished
product)
2/1/16
XIDAS, INVENTORY CONTROL
252
Inventory Management
For bottleneck items as the
spend is low but the market
risk is quite high, a high
service level (99.9%) will
reduce the risk of running
out of stock.
Strategic items can be
maintained with medium
service level in spite of a
high market risk(95%) as
these are very closely
monitored.
For leverage items as the
market risk is low, low
service levels can be
defined for calculating the
safety stock norms
For routine items, min-max
levels are to be defined
which is discussed later in
the section
High
Bottleneck Item
High Safety stock
Supply risk /
complexity
Safety Factor :
Routine Items
Min-Max Level
Strategic Items
Medium Safety Stock
Leverage Items
Low Safety stock
Low
Low
Business Impact
High
Inventory
Inventory
Vendor Managed Inventory ( VMI)
Vendor Managed Inventory is a tool for

optimizing supply chain performance with regard to
inventory carrying costs, risk mitigation.
Inventory is owned by customer but managed by suppliers
Benefits of VMI: Both supplier and buyer leverage VMI for
benefits
Reduced inventory requirements
Reduced demand uncertainty
Lower Administrative Costs accrued to both parties.
256
SCM Push Pull Strategy
Push, Pull, Push-Pull Systems

Push and Pull are traditional categories
of manufacturing operations
Push & Pull are opposite in terms of
demand and supply relationship.

More recent hybrid strategy of
combining the two, Push-Pull systems
Push Pull of SCM

Push Make to stock (MTS)
production is based on demand forecast.
Demand changes according to the boom and bust cycle of the
economy. Even if demand decreases and inventory increases,
inventory will turn into cash one day when demand recovers
MTS has been required to prevent opportunity loss due to
stock out and minimize excess inventory using accurate
forecasts
Inventory is maintained, products can be supplied with short
lead times & at high speed.
Ex: Escalator continues to supply (push) regardless of whether
there is actual demand (passenger)
Most of daily necessities such as processed foods, sundries,
and textiles are MTS-type products
July 2014
SCM by KCM
Impact of the Push Strategy

Push portion
Low uncertainty
Service level not an issue
Focus on cost minimization.
Long lead times
Complex supply chain structures
Cost minimization achieved by:
better utilizing resources such as production
and distribution capacities
minimizing inventory, transportation, and
production costs.
Supply Chain Planning processes are

applied.
Bullwhip Effect in Push-Based

Supply Chains
Leads to inefficient resource utilization
Planning and managing are much more
difficult.
Not clear how a manufacturer should
determine production capacity?
Transportation capacity?
Peak demand?
Average demand?
Results:
Higher transportation costs
Higher inventory levels and/or higher
manufacturing costs
more emergency production changeovers
Push Pull of SCM

Pull Make to order (MTO)
production is based on actual demand
based on the Demand side & uses Just-in-Time (JIT) and CRP
(Continuous Replenishment Program)
Manufacturing after receiving customer's orders
MTO, BTO (Build to Order) and ATO (Assemble To Order) , ETO
(Engineer to Order)is a business model of the assembly industry
Ex: Elevator starts when a button is pressed even if there is only
one passenger
Ex: construction, plant construction, aircraft, vessels, bridges etc.
ATO (Assemble To Order)- Dell, Solectron Corporation says "We
can assemble the computer you requested and deliver it within a
week.
National Bicycle Industrial Co., Ltd. says
"We can deliver a custom-made bicycle to you within two weeks."
July 2014
SCM by KCM
Impact of the Pull Strategy

Pull portion
High uncertainty
Simple supply chain structure
Short cycle time
Focus on service level.
Achieved by deploying a flexible and
responsive supply chain
Order-fulfillment processes are applied
Consider Two PC Manufacturers:

Build to Stock
Forecast demand
Buys components
Assembles
computers
Observes demand
and meets demand
if possible.
A traditional push
system
Build to order
Forecast demand
Buys components
Observes demand
Assembles
computers
Meets demand
A push-pull
system
Push Pull of SCM
July 2014
SCM by KCM
Push Pull of SCM
July 2014
SCM by KCM
Identifying the Appropriate Supply

Chain Strategy
Characteristics of the Push and Pull

Portions of the Supply Chain
Portion
Push
Pull
Objective
Minimize cost
Maximize service level
Complexity
High
Low
Focus
Resource allocation
Responsiveness
Lead time
Long
Short
Processes
Supply chain planning
Order fulfillment
Push-Pull Strategy
Some stages of the supply chain
operated in a push-based manner
typically the initial stages
Remaining stages employ a pullbased strategy.

Interface between the push-based
stages and the pull-based stages is
the pushpull boundary.
Supply Chain Timeline
Push-Pull Supply Chains

The Supply Chain Time Line
Suppliers
PULL STRATEGY
PUSH STRATEGY
Customers
High Uncertainty
Short lead times
Low Uncertainty
Long lead times
Push-Pull Boundary
271
Locating the Push-Pull Boundary
ocation of the push-pull boundary for various companies and ind

reduce inventory
holding cost
272
Impact of Demand Uncertainty and

Economies of Scale
Demand Uncertainty:
Higher demand uncertainty leads to a preference
for pull strategy.
Lower demand uncertainty leads to an interest in
managing the supply chain based on a long-term
forecast: push strategy.
Economies of scale:
The higher the importance of economies of scale
in reducing cost
The greater the value of aggregating demand
The greater the importance of managing the supply
chain based on long-term forecast, a push-based
strategy.
Economies of scale are not important

Aggregation does not reduce cost
Implementing a PushPull Strategy

Achieving the appropriate design
depends on many factors:
product complexity
manufacturing lead times
suppliermanufacturer relationships.
Many ways to implement a pushpull

strategy
location of the pushpull boundary.
Dell locates the boundary at the assembly
point
Furniture manufacturers locate the boundary
at the production point
Impact of Lead Time

Longer the lead time, more important
it is to implement a push based
strategy.
Typically difficult to implement a pull
strategy when lead times are so long
that it is hard to react to demand
information.
Impact of Lead Time
Impact of Lead Time

Box A
Items with short lead time and high demand uncertainty

Pull strategy should be applied as much as possible.
Box B
Items with long supply lead time and low demand

uncertainty.
Appropriate supply chain strategy is push.
Box C
items with short supply lead time and highly predictable

demand.
Continuous replenishment strategy
Suppliers receive POS data
They use these data to prepare shipments at previously
agreed-upon intervals
A pull strategy at the production and distribution stages
and push at the retail outlets.
Box D
Items with long lead times are long and unpredictable

demand
Inventory is critical in this type of environment
Selecting the Best SC Strategy

Higher demand uncertainty suggests pull
Higher importance of economies of scale
suggests push
High uncertainty/ EOS not important such
as the computer industry implies pull
Low uncertainty/ EOS important such as
groceries implies push
Demand is stable
Transportation cost reduction is critical
Pull would not be appropriate here.
278
Characteristics and Skills

Raw
Material
Customers
Push
Pull
Low Uncertainty
High Uncertainty
Long Lead Times
Short Cycle Times
Cost Minimization
Service Level
Resource Allocation
Responsiveness
279
https://www.youtube.com/watch?v=HKLpHNK-vS0
https://www.youtube.com/watch?v=_aeAtSiRpF0
https://www.youtube.com/watch?v=ZIv2e61SH1A
https://www.youtube.com/watch?v=rkpadFfyCqo
SCM Demand Planning
The Bullwhip Effect
Bullwhip Effect Defined

The bullwhip effect is the uncertainty
caused from distorted information
flowing up and down the supply
chain.
Who is affected?
Nearly all industries are affected!
Firms that experience large
variations in demand are at risk.
Firms that depend on suppliers
upstream or distributors and retailers
downstream may be at risk.
Results of the bullwhip effect
Excess inventories
Problems with quality
Increased raw material costs
Overtime expenses
Increased shipping costs
Results of the bullwhip effect continued.
Lost customer service

Lengthened lead time
Lost sales
Unnecessary adjusted capacity
Causes of the bullwhip effect
Un-forecasted sales promotions

Sales incentives
Lack of customer confidence
Customers turning back sales orders
Freight incentives
https://www.youtube.com/watch?v=Aqi5-KzQZWc
https://www.youtube.com/watch?v=lUCeHBk37kMhttps://
www.youtube.com/watch?v=2nlmkTYZG5s
Supplier Relationship Management

Managing Strategic Supplier Relationship &
Collaboration
Highlights
Drivers for Change
Buyer / Chief Purchasing Officer - Challenge
Supplier Base Optimisation
Strategic Sourcing Process
Supplier Financial Analysis
Risk Management
Supplier Evaluation (Performance Audits)
315
Drivers for Change
Today
Re-focus on process capabilities
Organisations are / need changing
Supply Market and Sourcing Strategies are
changing
Warehousing & Transportation are getting
sophisticated
Increased use of technology and suppliers
capabilities - to obtain visibility of the supply
chain
317
Chief Purchasing Officer /

Buyers
Do you know
Who are your key

suppliers?
What are the purchasing

risks and how to manage
it?
What is your organisation

total spend each year?
What are you Out / Insourcing?
What is the spend by

category / supplier? (Eg.
raw materials, IT)
Whether your purchasing

strategies are aligned with
business strategies?
What is the total

acquisition cost (TAC) &
the life cycle cost of
capital purchases?
What percentage of your

external spend is managed
by purchasing?
What is the value your

suppliers provide towards
your organisations
success and reputation?
Do you assess the

outcome of your
negotiations?
How do you develop your

key suppliers?
How to manage vendor
Supplier Base Optimisation
80 / 20 - Rule
Analysis to identify, 20% of suppliers
receiving the majority of purchase
dollars
Identify the minority of suppliers
causing the majority of problems
80/20 rule assumes the best
suppliers receive the majority of
321
purchase dollars
Optimisation - Why & What

With too large a supply base, the challenges
Supplier integration
Collaborative agreements
Supplier development
Joint total quality/cost reduction efforts
To determine the right mix of capable suppliers

Optimisation does not only mean adding or reducing
suppliers. It can mean switching suppliers, also !!
Optimisation does not mean supply base reduction
As companies continue to rely on fewer total

suppliers, the selection process takes on even
greater importance
322
Optimisation - Benefits
Reduced supply base risk
Lower transactions costs
Leverage leading to lower purchase costs
Ability to pursue value-added activities
Opportunity to work with world-class
suppliers, which leads to improved value
chain performance
323
Optimisation - Critical Success Factors

Time
Cross-functional teams
Supplier measurement system
Strategy development process that considers
optimisation goals
Overall supply base vision with Senior
Management support
324
Evolution of Sourcing
Paradigm
Tradition Strategic
al
Sourcing
Purchasi
Transaction
Project
ng
Supplier
Focus
Price,
Transaction
management,
Compliance
Reach
Local;
Many suppliers
Technology Spreadsheets
People
Decentralised
Buyers
Global Supply
Management
Enablement
rationalisation,
Spend consolidation,
Cycle-time reduction,
Standardisation
Balancing Total System

Cost;
Maximising shareholder
value; Enabling product
innovation
Multi-regional,
Some collaboration
with related functions
Global; Highly collaborative

across the enterprise and
visible at executive levels
Auctions, eSourcing,
Basic optimisation
Technology enablement
across all strategic sourcing
processes
Commodity Teams,
Center-led or
centralised
Cross-functional teams
Global
326

Supplier
Supplier
Evaluation and
and
Evaluation
Selection
Selection
Supplier
Supplier
Management
Management
Analyse
Identify
Analyse
Spend Requirements Market
Strategic
Sourcing
Supplier
Supplier
Development
Development
Develop
Manage
Award &
Strategy Negotiations Contract
Traditional
Procurement
327
Implement
Strategy
Analyse Spend
Buyer
Buying analysis across all divisions
Total number of suppliers used
Compare pricing across divisions
Consolidate spend, reduce suppliers and
obtain better pricing
Tools
Spend Analysis
328
Identify Requirements
Buyer
Users - product and service requirements
Quality requirements
Product specifications
Service performance expectations
Identify different requirements across divisions

Consolidate opportunities
Tools
Specifications
Surveys
Interviews
329
Analyse Market
Buyer
Specific market conditions
Rising input costs, capacity constraints, barriers to entry
Supply base constituents
Many players, dominant players
Analyse new products, services or diverse

suppliers
Tools
Internet research
Benchmarking
330
Develop Strategy
Buyer
Based on the internal requirements, industry
dynamics
Negotiate with current supplier(s)
Bring in new suppliers
Bid
Reverse Auction
Traditional RFI, RFP, RFQ
Tools
eSourcing tools
Cross functional teams
Project Management
331
Manage Negotiation
Buyer
Develop criteria for evaluating proposals based on internal
requirements
Initiate negotiations under chosen strategy
Compare and rank results based on key criteria
Tools
Online RFX
Weights / Scoring Models
Standard templates
Reverse Auction
332
Award Contract
Buyer
Based on results, determine best overall
supplier(s)
Cross-functional team decision
Finalise contract terms and conditions with

suppliers
Involve finance and legal
Tools
Automated weights / scoring
Online contract management
Cross functional teams
333
Implementation Strategy
Buyer
Determine how contract will be rolled out
Change management strategy
Identify and track performance metrics

Communicate value to stakeholders
Tools
Supplier Performance
Supplier Portals
Spend / Diversity Reporting
334
Supplier Financial Analysis
Financial Analysis - When & Why..

When do it?
For critical items
For new suppliers
When pursuing longer-term agreements
For purchase requirements involving
significant dollars
Why do it?
To manage business risk
To eliminate marginal suppliers early in the
evaluation process
336
Ratio Analysis
Profitability
How profitable is the supplier? What

rate of return is the supplier earning?
Gross and net profit margin
Return on equity
Return on investment
Liquidity
How capable is the supplier of meeting

short-term cash needs?
Current ratio
Quick ratio
337
Ratio Analysis (Contd.)

Leverage
Is the supplier over-leveraged and capable of
paying long-term obligations?
Debt to assets
Time interest earned
Fixed charge coverage
Activity
How effectively is the supplier managing
assets?
Inventory turnover
Average collection period
Return on net assets
338
Contract Management
Termination (Escape) clauses
Service Level Agreement (SLAs)
Clear communicated specifications
Key Performance Indicators (KPIs)
Feedback and review on a regular basis
Liquidated damages for poor performance
339
SCM Performance measures
SCOR MODEL
The SCOR [Supply-Chain Operations
Reference-model] by the SupplyChain Council provides a supply
chain process framework of
plan source make deliver return
These elements are the key to SCOR
success.
SCOR SPANS
All customer interactions
From order entry through final payment
All product and service transactions

From your suppliers supplier to your
customers customer
All market interactions

From understanding all of the elements
SCOR: THE CONFIGURATION OF A

SUPPLY CHAIN
PLAN levels of aggregation and
information
SOURCE locations and products
MAKE production sites and methods
DELIVER channels, inventory deployment

and products
RETURN locations and methods
SCOR: MEASURE PERFORMANCE

INTERNAL & EXTERNAL
RELIABILITY achievement of customer
demand fulfillment complete and on-time
RESPONSIVENESS the time it takes to

react to and fulfill customer demand
AGILITY - the ability of supply chain to

increase/decrease demand
COST
objective assessment of all supply

chain cost elements
ASSETS the assessment of all resources
SCOR: REALIGN SUPPLY CHAIN

PROCESSES & BEST PRACTICES
Classic process re-engineering from "As-Is"
to "To-Be"
Lean Manufacturing analysis and process
change
Six-Sigma analysis of defective processes
ISO-9000 style process capture and control
Balanced SCOR cards and benchmarking
Many more industrial engineering based
best-practice techniques
SCM Risk Management
Agenda
What is (supply chain) risk?
What are typical supply chain risks?
How to manage supply chain risks?
359
What is Supply Chain Risk

Management
Risk = probability
consequences
of
occurrence
Supply chain risk management (SCRM) is

"the implementation of strategies to
manage both everyday and exceptional
risks along the supply chain based on
continuous risk assessment with the
objective of reducing vulnerability and
ensuring continuity".
360
Risk Exposure
361
Why are todays supply chains so

DYNAMIC AND COMPLEX?
Faster (Growth, Innovation)
Stronger (Competition)
Cheaper (Lean, economies of scale, efficient)
Quicker (JIT, agile)
Shorter (Lead times)
Wider (Globalization)
Lesser inventory (VMI)
Changing (Demands, Technology)
Heavier (Requirements, Workload)
362
Why is supply chain risk important?

Even a relatively small supply chain disruption
caused by a localized event may have
consequences across the global economic system
No control over causes to events in supply chain
Only control over consequences of events in
supply chain
363
Location of risk in the

supply chain
SUPPLY
RISK
PROCESS
RISK
DEMAND
RISK
NETWORK/
CONTROL
RISK
Environmental Risk
364
Supply Risk
Dependency only on key suppliers
Quality and management issues
arising from outsourcing
Variability in lead-times
Poor quality of RM supplied
Delays in transportation
365
Process Risk
Manufacturing yield variability
Lengthy set-up times and inflexible
processes
Equipment reliability
Capacity shortage/bottlenecks
Outsourcing key business processes
Power failure
Breakdown of machines
Absenteeism during festive season,
Problems in IT systems
Warehouse problems
366
Demand Risk
Loss of major customers
Volatility of demand
Concentration of customer base
Short life cycles
Innovative competitors
Inaccurate forecasts
367
Network/Control Risk
Inefficient communication
Poor visibility along the pipeline
Inappropriate rules that distort demand
Lack of collaborative planning and forecasts
Bullwhip effects due to multiple reasons
Security Risks - theft, data loss, counterfeiting,
terrorism, piracy
368
Environmental Risk
MacroRisks
Economic shifts, recession, exchange rates, custom, natural
disasters, labor unrest
PolicyRisks
Actions and sanctions of governments, shifts in legislation
CompetitionRisks
Uncertainty about competitors moves and actions
ResourceRisks
Lack of human resources, capital or technology
No disaster management focus
369
Supply Chain Risk?
370
Managing Supply Chain Risk

Map the supply chain
Identify the critical paths
Utilise cause and effect analysis (TQM tools)
Implement supply chain event management
Adopt agile practices
Formalise supply chain risk management
Using global sourcing to minimize the risk
371
Identify Critical Paths

Critical paths are characterised by: Long lead-times
No short-term alternative source of supply
Bottlenecks
High levels of identifiable risk (i.e. supply,
demand, process, control and environmental risk)
372
Cause And Effect Analysis

Pareto analysis (80% of disruptions will share
20% of the causes)
Asking why? five times
Fishbone charts
Failure mode and effects analysis
373
Cause And Effect Analysis

Reference: Cranfield University, School of Management
No Stock
Available
Materials
Supply Problem
Lead-Time
Too Short
Failure to
Achieve Plan
Inflexible
Systems
Forecasting
Problems
Capacity
Constraint
Failure to
Deliver on
Time
Inadequate
Communications
Poor
Scheduling
Inadequate
Supplier
Management
Carrier
Performance
Poor Process
Control
374
Quality
Problems
Why Analysis
1. Q.
A.
2. Q.
A.
3. Q.
A.
4. Q.
A.
5. Q.
A.
Why did the machine stop?

There was an overload and the fuse blew.
Why was there an overload?
The bearing was not sufficiently lubricated.
Why was it not sufficiently lubricated?
The lubrication pump was not pumping sufficiently.
Why was it not pumping sufficiently?
The shaft of the pump was worn and rattling.
Why was the shaft worn?
There was no strainer and metal scrap got in.
Repeating why five times like this can help uncover the root problem and
correct it. If this procedure were not carried through, one might simply
replace the fuse or the pump shaft. In that case the problem would
reoccur in a few months.
Taiichi Ohno
Toyota Production System
375
Failure mode and effects analysis (FMEA)

Asks three questions:
- What could go wrong?
- What effect would this failure have?
- What are the key causes of this failure?
Provides an assessment of risk for each possible
failure:
S = severity of effect
O = likelihood of occurrence
D = likelihood of detection
376
Risk Analysis Scoring

System
S = Severity
1.
2.
3.
4.
5.
no direct effect on operating service level

minor deterioration in operating service level
definite reduction in operating service level
serious deterioration in operating service level
operating service level approaches zero
O = Likelihood of occurrence
1.
2.
3.
4.
5.
probability of once in many years

probability of once in many operating months
probability of once in some operating weeks
probability of weekly occurrence
probability of daily occurrence
D = Likelihood of detection
1.
2.
3.
4.
5.
detectability is very high

considerable warning of failure before occurrence
some warning of failure before occurrence

little warning of failure before occurrence
detectability is effectively zero
377
Agility holds the key
Agile supply chains are designed to respond rapidly to

unpredictable change. They are based upon a number of
principles:Very close connection to final marketplace
Visibility of real demand
High levels of synchronicity upstream and downstream
Organisational focus on processes rather than functions
Advanced level of collaborative planning with supply
chain
partners
Continuous search for time compression opportunities
378
Globalization
Globalization allows us:
To site facilities in safer locations
Tap into educated overseas workforces and set
up production centers closer to sources of raw
material
By opening the door to using vendors and
suppliers from around the world
The number of vendors and suppliers that
companies can tap to fill gaps in their supply
chain.
379
Robust Or Resilient
A robust process can be defined as a process
able to deal with reasonable variability
A resilient supply chain can be defined as a
supply chain with the ability to recover quickly
from unexpected events impacting supply
chain performance
380
Creating a Resilient Supply Chain: Strategic

Approaches
Supply Chain
Design
Supply Chain
Understanding
Supply Base
Strategy
1. Supply Chain
(re)engineering
Visibility
The Resilient
Supply Chain
4. Agility
Velocity
Supply Chain
Continuity Teams
3. Supply Chain
Risk Management
Culture
Board level
responsibility &
leadership
Collaborative
Planning
2. Supply Chain
Collaboration
Supply Chain
Intelligence
Consider risk in
decision making
381
SUPPLY CHAIN RISKS

Disruptions of any kind
Disasters, labor disputes, supplier
problems,
Delays in the systems
Inflexibility of supply sources, poor yield,
capacity or bottlenecks,
Systems issues
Lack of systems integration, system
breakdowns,
Forecasting problems
Excessive inaccuracy due to seasonality,
SKU variety, short life cycles, small
SUPPLY CHAIN MANAGEMENT:

PROBLEMS & SOLUTIONS
THE PROBLEM
A POTENTIAL SOLUTION
Uses numerous transportation carriers
Consolidate to as few carriers as

necessary and press for steep freight
discounts
Less-than-truckload freight quantities

from manufacturing sites to customers
Ship railcar or truckload quantities to

DCs then LTL to customers
Excessive loss and damage in transit
Identify sources of damagetransit,

packaging, or handling and correct
The supplier base had numerous

suppliers with many LTL shipments
Consolidate the supplier base based

on total system cost and efficiency
Purchasing buys based only on price
Convert to purchasing on a total

system cost basis
SCM ISSUES
SUPPLIER SELECTION
Capability and quality of supplier
Logistic compatibility
Systems compatibility
What form should it be?

Contract, partnership, or strategic alliance?
Setting requirements
Continuous improvement
Extensive corporate access
What are the key metrics that will be

used to evaluate supplier performance?
SCM ISSUES
SUPPLIER CERTIFICATION
involves the process of selecting and
qualifying suppliers through a series of
tests.
It may require
initial interviews and tours,
initial samples,
a detailed facility review
production, systems, processes,
quality, ,
and more.
SCM ISSUES
SUPPLIER LOGISTICS: SYSTEMS
EVENT: The focal firm places 100 office items with
Supplier A and 200 production supply items with
Supplier B. Both suppliers are on two-year
contracts. Requisitions are electronically sent to the
supplier requiring at least once-a-week delivery, and
suppliers are paid every ten days.
MINIMUM SUPPLIER REQUIREMENTS: [1]
local; [2] own their warehouse, [3] own their
transportation, and [4] have compatible IT for
order placement and accounting purposes.
EXPECTED RESULTS: reductions of [1] inventory,
[2] turnaround time, and [3] stock outs .
SCM ISSUES
SUPPLIER LOGISTICS: SYSTEMS
EVENT: A major company requires suppliers that
can produce branded products to their

specifications and provide verification of the quality
of the product.
MINIMUM SUPPLIER REQUIREMENTS: [1]
world-class facilities; [2] Six Sigma or similar
quality system, and [3] significant flex capacity.
RESULTS: supplier [1] ships directly to customer
warehouses and distribution centers, [2]
eliminates customer quality verification delays
and expense, and [3] provides a more
predictable flow of product to inventory.
SCM ISSUES
SUPPLIER INVOLVEMENT
Design
Standardization
Customization
Modularization [interchangeability
minimize the number of parts /
components]
Performance testing [standards,
specifications, and reporting results]
Change management strategies
Flexibility
SCM ISSUES
Supplier-managed inventories
Excellent for changing customer
demand when
Customers have trouble forecasting
SCM ISSUES
Changing customer demand

A complex product offering
Economies of scale
Automation, purchase volume,
production run size,
Requirements for new versus existing
products
SCM ISSUES
Component / assembly management
Just-in-time [JIT]
Frequent, small and consistent
deliveries
Co-location possible
Dt
Level loaded facility [lowest long-term cost of production]
D1
D2
D3
To understand implications to the total system, you must understand each

demand schedule [D1, D2, and D3] as well as the total demand schedule [Dt the produced line in this example].
Role of IT in SCM
INFORMATION TECHNOLOGY SOLUTION FOR

SUPPLY CHAIN INTEGRATION
For high level of supply chain integration, it is

essential to develop adequate information
systems and use information technology that
manages
product flow,
information flow,
and cash flow from end to end on real- time basis.
IT Infrastructure for
Supply Chain Integration
Electronic Data Interchange (EDI)

EDI is an inter-organization
computer-to-computer exchange of
standard business documents in a
structured and machine-processable
format without human intervention
to improve the speed and accuracy
of the information flow.
Components of EDI
EDI Standard
EDI Software
Communication Medium
Benefits of EDI
The major benefits of EDI in supply chain
integration are:
Improves customer responsiveness
Reduces transaction costs and times
Increases accuracy and productivity
Strengthens supply chain relationships
Increases ability to compete globally
Improves quality of decision to exploit
business opportunities.
Bar Code System (BCS)

The bar code system is an identification technology
wherein there is placement of computer-readable
codes on items, cartons and containers in the form
of grouping of parallel bars (usually blocks) of
different widths separated by light spaces (usually
white), again, of different widths.
It facilitates speedier flow of logistical information
such as quick tracking receipts, movement details,
product identification, etc., with a lesser probability
of error .
Characteristics of a Typical Bar Code
Benefits of Bar Code System

Speeds up data entry process
Enhances data accuracy
Reduces material handling labour
Minimizes on-hand inventory
Monitors labour efficiency
Improves customer service
Enterprise Resource Planning (ERP)

ERP is a computerized integrated set
of application software modules
for
different business processes such as
production, distribution, financial,
human resources, procurement, supply
china management, etc.,
used by firms providing
operational, managerial and strategic
information for making decisions
strategically to improve the productivity,
quality and competitive advantage.
ERP System Components
Critical ERP implementation issues
Never-ending implementation
Importance of process mapping
Process redesign
Use of consultants
Excessive cost
Resistance to change
Errors during implementation
Rapid technological change
Benefits of ERP
Improving productivity and enhancing a
competitive edge
Bringing about a tradeoff between demand and
supply
Bringing together people who work on shared
tasks
Ensuring a smoother flow of inventory and
information at all levels
Reducing the replenishment cycle time
Overall organizational look-ahead capability and
control.
WEB-BASED SUPPLY CHAIN

A Web-based supply chain is dynamic, high
performance network of customer and
vendor partnerships and information flow
creating new and unique value proposition
mainly due to addition of digital value.
Value Prepositions through Web based
supply chain:
Super Service
Convenient Solution
Customization
Web-Based Supply Chain

Integration
Consumer
Carriers &
3PL
Vendors
Advanced
Planning
and
Scheduling
Web-Based
Supply
chain
Agile
Manufacturing
Distribution
Channels
Collaborative
Planning
Forecasting &
Replenishment
Order
Management
Distribution
Warehouse
Agile Manufacturing System

Agile manufacturing system is an IT
enabled process of web-based supply
chain integration facilitating firms to
support the demand and mass
customization requirements.
Its applications support complex flow
manufacturing, the just-in-time-based,
pulls production method that enables
manufacturing in lot sizes of one.
Agile Manufacturing System

Benefits in web-based supply chain
through agile manufacturing
application:
Greater product customization
Rapid introduction of new or modified
products
Interactive customer relationships
Dynamic reconfiguration production
processes
Benefits of Web-based Supply Chain

Delivers cost saving through supply
chain integration
Reduce inventory across supply chain
network
Reduce procurement costs and
improve vendor management
Improve customer value and services
Increasing revenues and profitability
A Story
Im growing fat. I
need to monitor my
body weight for the
next 6 months.
But ..Oh, my
God! How do I do
it fast and
easily ???
I want to know the

fat content of each
food item
I want to include
exercise in my
daily activities
and follow it up
Dont worry Tom.,

I am here to help
you.
I will you teach you

some of the QC
tools
QC toolsWhat is
that ?
That is Quality
control tool.
( In your case it can
be Quantity Control
tools)
Check Sheet
Pareto Diagram
Cause & Effect diagram
7 QC Tools
Graphs
Histogram
Scatter Diagram
Stratification
Exercise
Why the child is crying?

Write why why analysis
Normally the answers will be..

As the bucket has fallen down & fish died..
Why the
Child is crying?
As the spanner is fallen on his feet

As he is hungry & not getting any thing to eat
etc
This is what is jumping to conclusion..
Approach
Sad
Afraid
Why the
Child is crying?
Hurt
Pretending
Happy
This Can be the first why..

(May not be complete)
Approach
Sad
Afraid
Why the
Child is crying?
Hurt
Pretending
Hungry
Not able to get

any thing to eat
Scolding by parents
Got injured
Afraid
Not able to
reach sweets
box
Spanner fallen on his

toe
Bucket fallen on his
toe
Hit by bucket
Happy
It can be further developed
Not able to
open box
Hit by box
Daily Work Management (PDCA)

Monitor production / output for variance
Monitor customer complaints for early
resolution & preventive actions
Monitor Rejections / Reworks for variance
Monitor Kaizen / Improvements
Monitor Breakdowns / stoppages
Monitor accidents
Performance measurement - PQCDM in a Unit

(As presented during Deming audit)
The Power of SHUNYA

Zero Customer complaints
Zero Accidents
Zero Breakdowns
Zero Rejections
Zero loss of production
The journey in this direction will help industries to
get more business opportunities / new customers
Tips for Effective Supply Chain

Management
The following are some of the tips for effective Supply Chain
Management:
View your supply chain as a

strategic asset
Develop an end-to-end process
architecture
Design your organization for
performance
Build the right collaborative model
Use metrics to drive business
successes
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all that you have
learned about
supply chain
management.
Case Study
Globus
Globus Inc.
Inc. is
is a
a new
new
entrant
entrant in
in the
the market
market
of
of Computers
Computers and
and
Laptops.
Laptops. It
It has
has newly
newly
launched
launched its
its LL Series
Series
of
of Desktops
Desktops and
and H
H
Series
Series of
of Laptops.
Laptops.
1.
1. What
What role
role will
will
reverse
reverse logistics
logistics
play
play in
in the
the Supply
Supply
Chain
Chain of
of Globus?
Globus?
2.
2. How
How can
can an
an
effective
effective and
and
efficient
efficient reverse
reverse
logistics
logistics system
system
benefit
benefit Globus?
Globus?
Summary
Functions of a
Warehouse
Management
System
Steps to Improve
Throughput of
Process Chain
Supply Chain
Planning Function
Introduction to
Supply Chain
Management
Supply Chain
Execution Function
Lets look at each in detail.
Tips for Effective

Supply Chain
Management
Summary
Operations Front
Functions
Cycle Count
Process
Inventory Front
Functions
Functions of a
Warehouse
Management
System
Introduction to
Supply Chain
Management
Reporting
Function
Summary
Network
Design
Demand
Planning
Supply Chain
Planning Function
Introduction to
Supply Chain
Management
Supply
Planning
Logistics
Capacity
Planning
Summary
Introduction to
Supply Chain
Management
Tips for Effective
Supply Chain
Management
View supply
chain as
strategic
asset
Develop end-toend process
architecture
Use metrics to
drive business
successes
Build right
collaborative
model
Design
organization for
performance
Summary
Sub-ordinate
everything to
constraint
Exploit the
constraint
Identify the
constraint
Evaluate the
constraint
Find the new
constraint and
repeat the
steps
Steps to Improve
Throughput of
Process Chain
Introduction to
Supply Chain
Management
Summary
Introduction to
Supply Chain
Management
Supply Chain
Execution Function
Supply
Management
Transportatio
n
Management
Return
Logistics
Management
Warehouse
Management
Glossary
Click each alphabet to learn more.
C
G
M
O
W
Glossary
Customer - Customer is
someone who pays for
goods or services
Cyclical - Cyclical means
recurring in cycles
C
G
M
O
W
Glossary
Global - Global means

involving the entire earth
and that which is not
limited or provincial in
scope
Goods - Goods is a raw
material or product that is
bought and sold
commercially in large
quantities
C
G
M
O
W
Glossary
Merchandise Merchandise is a
commodity offered for
sale
Management Management is the act of
managing something
C
G
M
O
W
Glossary
Order - Order means a

commercial document
used to request someone
to supply something in
return for payment and
providing specifications
and quantities
Operations - Operations
include all the activities
involved in the running of
a business
C
G
M
O
W
Glossary
Workforce - Workforce
means the force of
workers available or the
manpower
Warehouse - Warehouse
is a storehouse for goods
and merchandise
C
G
M
O
W
e
v
a
h
You
y
l
l
u
f
s
s
e
c
c
Su
e
h
t
d
e
t
e
l
p
Com
n
o
e
l
Modu
o
t
n
o
i
t
c
u
d
Intro
n
i
a
h
C
y
l
p
Sup
!
t
n
e
m
e
g
a
Man
u
t
a
r
g
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la

Supply Chain Management For Mba

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Supply Chain Management

Why people run Industry ?

deliveries with improved Quality

How to run Industry

Why Focus on Integrated approach

Hence the Focus on

An overview of supply chain

An overview of supply chain

An overview of supply chain

Demand for low pricing, high quality, customer: supplier

Supply Chain Constitutes Several

The Supply Chain: from Original

Increase Customer Responsiveness at Least Cost

Objectives of a Supply chain

Objectives of a Supply chain

Challenges in Supply chain

Decisions in Supply chain

Product designSCM by KCM

Supply Chain Strategy

The Extended Enterprise Supply Chain

Maximized value at minimized cost

Competitive and Supply Chain

Supply chain strategy:

Consistency and support between supply chain

Supply Chain Strategy

Competitive and Supply Chain

SCM - Strategic Integration

Strategy formulation in SCM

SCM Strategic Integration

Strategy 1 Demand Planning

Strategy 2 Adopt Supply Chain

Strategy 3 Product Design

Optimize product designs for supply, manufacturing, and

Innovation is crucial to being one step ahead of the competition.

In order to be successful, products must be manufactured at the right

Product innovation and competitive advantage increasingly stem

If company manages the information, people, processes, and

Strategy 4 Sales & OP

Align supply chain with business goals by connecting sales and

Though S & OP processes provide coordination among sales,

These gaps can be bridged with integrated business planning. This

This strategy reconciles the operating plan against financial goals.

It provides real-time visibility to key dimensions for success -- demand,

Strategic Decisions in SCM

Objectives of SCM strategies

Guidelines in developing supply chain

Guidelines in developing SC strategy

Guidelines in developing supply chain

Guidelines in developing supply chain

Framework for Supply Chain

Aligning Supply Chain

Strategic Supply Chain Alignment

Supply Chain Integration Strategy

Strategic Supply Chain Management

How should production be organized

Where should plants and suppliers

Key Elements of Sourcing Strategy

Strategic Supply Chain Management

What level of production and

What is the optimal number, role,

What channel structure(s)

Key Elements of demand flow strategy

Strategic Supply Chain Management