SUPPLY CHAIN MANAGEMENT

Presented by
Meganath Surendra Sandeep ramu

WHAT IS SUPPLY CHAIN MANAGEMENT

" Is the strategic management of activities involved in the acquisition and conversion of materials to finished Products and deliver to the customer"

Supply chain objectives may differ from situation to situation. For functional products, cost efficiency is the critical factor. For innovative products, responsiveness is the important factor. Directly or in-directly fulfilling a customer order/need.

SUPPLY CHAIN INCLUDES :

MATERIAL

FLOWS FLOWS

INFORMATION

FINANCIAL

FLOWS

Supply Chain Structure

SUPPLIER FACTORY
DC WHOLESALERRETAILER

Raw Materials

Finished Goods

Information Flow

suppliers

manufacturer

distributors

retailers

consumers

SCM achieves

+
The right The right

+ +
The right The right

+
The right

+
The right

=
Higher

Product

Price

Store

Quantity

Customer

Time

Profits

Supply chain as an efficient customer satisfying process Effectiveness of the whole supply chain is more important than the efficiency of each individual department.

Cycle View of Supply Chains

Customer
Customer Order Cycle

Retailer Distributor

Replenishment Cycle

Any cycle 0. Customer arrival 1. Customer triggers an order 2. Supplier fulfils the order 3. Customer receives the order

Manufacturing Cycle

Manufacturer
Procurement Cycle

Supplier

Push vs Pull System

In Push systems, work release is based on downstream demand forecasts
Keeps inventory to meet actual demand Acts proactively
e.g. Making generic job application resumes today (e.g.: exempli gratia)

In Pull systems, work release is based on actual demand or the actual status of the downstream customers
May cause long delivery lead times Acts reactively
e.g. Making a specific resume for a company after talking to the recruiter

Push/Pull View of Supply Chains

Procurement, Manufacturing and Replenishment cycles
Customer Order Cycle

PUSH PROCESSES

PULL PROCESSES

Customer Order Arrives Push-Pull boundary

Step 3- Material flow planning

Determine the exact flow and timing of materials Arrive at decisions by working back from the projected demand through the supply chain to the raw material resources Techniques
ERP

Step 4 - Transaction processing and short term scheduling

Customer orders arrive at random This is a day to day accounting system which tracks and schedules every order to meet customer demand Order entry, order fulfillment and physical replenishment

DELLS DIRECT BUSINESS MODEL OF VIRTUAL INTEGRATION

Advantages of a tightly coordinated supply chain traditionally facilitated by vertical integration. Combined with focus and specialization. Leveraging on investments others have made and focusing on delivering solutions and systems to customers Fewer things to manage - fewer things go wrong Suppliers engineers part of Dells Design

DELLS DIRECT BUSINESS MODEL OF VIRTUAL INTEGRATION

Share information with partners in Real time fashion. Stitch together a business with partners that are treated as if they are inside the company. Change focus from how much inventory there is to how fast it is moving Assets collect risks around them one way or the other. Limited or no testing - Eg. Sony Monitors

DELLS DIRECT BUSINESS MODEL OF VIRTUAL INTEGRATION

Only three Manufacturing centers - Austin, Ireland and Malaysia. Inventory levels and replenishment needs sometimes conveyed to vendors on hourly basis. Substitute information for inventory and ship only when we have real demand from real end customers Clever segmentation - Focus on institutional markets - 70% to very large customers with annual purchases exceeding $1 million.

DELLS DIRECT BUSINESS MODEL OF VIRTUAL INTEGRATION

Exit from retail business after wrong entry in 1989. Segmentation - closeness to customers and access to valuable information. Demand forecasting as a critical sales skill Help global customers, manage their total purchase of PCs by selling them a standard product Dell server loads software on customers computers Meet customers needs faster and more efficiently than any other model.