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Supply Chain ManagementSupply Chain Management
And Service Supply RelationshipAnd Service Supply Relationship
Submitted to:
Prof. Bawa
Submitted By:
Group 5
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What is SCM?What is SCM?
y Supply Chain encompasses all activities
associated with the flow and transformation of
goods from the raw materials stage, to the end
user .
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Typical Supply chain:Typical Supply chain:
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Different processes of SCM:Different processes of SCM:
- Raw materials supply
- Production management
-Transportation- Inventory management
- Information system management
- Order processing- Material handling
- Customer management
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Retailers
Distribution Centers
2nd Tier Suppliers
Customers
1st
Tier Suppliers
Assembly/ Mfg.
1st
Tier Suppliers
2nd Tier Suppliers2nd Tier Suppliers
SCM MODEL
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Components of Supply chain :Components of Supply chain :
y Supplier: Source of raw materials, component
parts, semi manufactured products and other
items that occur early in the supply chain-
unfinished or unsuppliable products.
y Manufacturers: Makers of products. suppliers
produce components or sub assemblies, while
manufacturers perform the task of final
assembly or product integration.
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y Distributers: Responsible for the storing
and handling the materials at receiving
docks, warehouses and retail outlets.
y Retailers:These are the manufacturers
customers;The stores that buy the actualproducts.
y Consumers:The person who actually buysthe product for consumption.
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Decision Variables in Supply Chain Management :
y Location: Of facilities and sourcing points
y Production: what to produce in which facilities
y Inventory: how much to order, when to order, safety
stocks
y Transportation: mode of transport, shipment size, routing,
and scheduling
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Vertical IntegrationVertical Integration
y Choosing between making or buying an item
y Developing the ability to produce goods or services
that are previously purchased.
y It can take the form of forward or backward
integration
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RAW
MATERIALBUYERS
STEEL DEALERS
COMPUTERSCALCULATORSSILICON
CURRENT
PRODUCTION
BACKWARD
INTEGRATION
FORWARD
INTEGRATION
AUTOMOBILE
CIRCUITBOARDS
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Bullwhip EffectBullwhip Effect
11-11
Final CustomerInitial
Supplier
Demand
A problem frequently observed in an Unmanaged supply chain
is the Bullwhip effect .It is defined as an oscillation in the
supply chain caused by demand variability.
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y Demand variability increases as one moves up the supply chain away from the
retail customer
y Small changes in consumer demand , result in large variations in orders placed
upstream.
y The network can oscillate in very large swings as each organization in the supply
chain seeks to solve the problem from its own perspective.
y Results in increased cost and poorer service.
Bull Whip Effect (Cont.)
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Causes of Bull Whip Effectof Bull Whip Effect
Demand Forecast Updating
Order Batching
Price Fluctuations
Rationing Within the Supply Chain
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Push vs. Pull SystemPush vs. Pull System
y In Push systems, work release is based on downstream
demand forecasts
Keeps inventory to meet actual demand
Acts proactively
y 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
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Push/Pull View of Supply ChainsPush/Pull View of Supply Chains
Typically, Procurement,Manufacturing and
Replenishment cyclesTypically, Customer
Order Cycle
Customer
Order Arrives
PUSH PROCESSES
(Proactive) PULL PROCESSES(Reactive)
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Mumbai Dabbawallas
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Nutan Mumbai Tiffin Box Suppliers Association Popularly dabbawala (one who carries the box)
0 % Fuel
0 % Modern Technology
0 % Investment
0 % Disputes
99.999999 % Performance
100 % Satisfaction
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Here the markings of the collection point are :
VP Vile Parle
C CooperHospital
Red color denotes the station & the dabbawala
team at the collection & delivery points.Destination markings are
10 Nariman Point
9- Dabbawala handling the Destination area
M Mittal Towers.
16- 16 th Floor.
1010
VP
9
M16
C
The color coded on Dabbas can be read in the following pattern
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Supply chain logistics and efficient reverselogistics
The concept of Multi-level coding
Time Management
Customer Relationship Management
Customer Satisfaction
Cost effectiveness
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World Market Leader in the QSR area (Quick Service
Restaurant)
100 sales items in the restaurant
200 restaurants per DC
Delivery frequency: ~3/wk, higher in urban area.
2-3 stops per route
Exclusive distributors (3PL)
McDonalds Supply Chain
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RadhakrishnaFoodlandDistribution
Centres
(Mumbai)
TrikayaAgriculture
(Iceberg
Lettuce)
VistaProcessed
Foods Pvt. Ltd.(Chicken andVegetable )
DynamixDairy
Industries (Cheese)
McDonalds
Outlet
McDonalds
Outlet
McDonalds
Outlet
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McDonaldsMcDonalds
Supply ChainSupply Chain
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McDonalds Supply Chain ChallengesMcDonalds Supply Chain Challenges
Even stronger focus on freshness and qualityEven stronger focus on freshness and quality
OnOn--going product innovationsgoing product innovations
Strong customer demand fluctuationsStrong customer demand fluctuations
based on promotionsbased on promotions
OrderOrder-- and inventory managementand inventory management
RestaurantRestaurant DCDC suppliersupplier -- raw material supplierraw material supplier
Bull Whip effectBull Whip effect
Change Management in a deChange Management in a de--centralized structurecentralized structure
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ServiceService--Supply Relationship:Supply Relationship:
Service supply relationship management is a systems
approach that recognizes the customer supplier duality
found in the delivery of services.
Three Important features of Service Supply
relationship are:I. Bidirectional optimization
II. Management of productive Capacity
III. ManagingRisk
Service Supply Relationship management incorporates
customers into knowledge management strategy of the
company.
This enhances Value and Quality of services provided.
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CustomerCustomer--Supplier Duality in ServiceSupplier Duality in Service
Supply Relationships (Hubs)Supply Relationships (Hubs)
aterial trans er In ormation trans er
Supplier
Service
esign
Service
rovider ustomer
ter i l tr ns er n orm tion tr ns er
Supplier
Service
esign
Service
rovider ustomer
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SingleSingle--Level Bidirectional ServiceLevel Bidirectional Service
Supply RelationshipSupply RelationshipService
Category
Customer Input
Output
Service
Provider
Minds Student Mind
Knowledge
Professor
Bodies Patient Tooth
Filling
Dentist
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Service
Category
Custom
er
Input
Output
Service
Provider
Input
Output
Provider
s
Supplier
Minds Patient DisturbedTreated
Therapist
PrescriptionDrugs
Pharmacy
Bodies Patient Bood
Diagnosis
Physicia
n
Sample
Test Result
Lab
Two-Level Bidirectional Service
Supply Relationship
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Sources of Value in Service SupplySources of Value in Service Supply
Relationships:Relationships:y Bi-directional Optimization
y Managing Productive Capacity
-Transfer: make knowledge available (e.g. web based
FAQ database)
- Replacement: substitute technology for server (e.g.
digital blood pressure device)
- Embellishment: enable self-service by teaching (e.g.
change surgical dressing)
y Management of Perishability.
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Impact of Service Supply Relationships:Impact of Service Supply Relationships:
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SCM FOR A RESTAURANT
Management Information Systems- When the inventory reaches the
minimum level it automatically places an order to the suppliers.
Sourcing and Procurement- Locating the suitable suppliers and obtaining
the expected quantity and quality, with price as a major influence.
Order Processing- It is the work flow associated with the picking, packingand delivery of the packed item(s) from the suppliers to the stores.
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SCM FOR A RESTAURANT
Inventory ManagementThe formal management of the timing and
quantities of goods to be ordered and stocked by the hotel in order that
demand can always be satisfied without excess expenditure. It is done
with the help of MIS.
Customer Service- Whenever a customer enters into a restaurant
and places an order care should be taken so that every item on the
menu is available. If it is not available it would imply inefficient Supply
and Inventory Management.
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FARMER
Grains
FruitsVegetables
Oil
Processing and
Packaging
Distributor
Storage
Transport
Packaging
STORES
MANAGEMENT
Inventorymanagement
Supplier relations
Supplies
Management
LAUNDRY
MANUFACTURING
Cutlery and crockery
Textile
DAIRY &
POULT
RYMilk
Butter
Cream
Poultry
Grocery stores
and wholesalers
Wholesale Market
Suppliers I,II
Supply chain in A Restaurant:
SUPPLY CHAINMANAGEMENT
{ GAUBAS
restaurant,
Bangalore }
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DHL Supply Chain:DHL Supply Chain:
I ivi al st rs rp rat st rs
DHL Offic
tral L cati Offic
r p
DHL Pack
pick p r p
L
cal
r Nati
al
/ I
t
r
ati
alDistri ti
l cal
R gi s rti g a lk packi g
R gi al H Distri ti if l cal
tr ck
A
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Cargo or Courier
Airport
Destination / Hub
cargocourier
Blue DartFlights
Destination Warehouse
Destination
truck
truck
Destination found?
yes
DHL ffice at
Destination
no
Reverse
logistics to
sender
A
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Inbound LogisticsInbound Logistics -- DHLDHL
y Procurement Services
y Raw material warehousing
y Transportation
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Outbound LogisticsOutbound Logistics -- DHLDHL
y InboundTo Manufacturing (for the client)
y In-plant Logistics
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Value Added Services :DHLValue Added Services :DHL
y Contract packing
y Comprehensive co-packing service
y Additional packing solutions, including
packaging design and packaging materials
procurement
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Inventory Management &Inventory Management &
WarehousingWarehousing -- DHLDHLy Finished GoodsWarehousing
y Main Collection offices
y Hub airport
y Main Warehouse outsideOctroi
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DistributionDistribution -- DHLDHL
y Home delivery
y In-store Logistics
y Service PartsLogistics
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OtherFacilitiesOtherFacilities -- DHLDHL
Barcode Scanning at milestone locations
Preparation of OnlineWaybills
Online booking of consignments collect
pickup
Last 99 days shipping records available throughthe website
DHL Express SMS
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DHL InnovationsDHL Innovations
y DHL SMART SENSORTEMPERATURE
y RFID technology (Radio Frequency
Identification
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IMPACT OF IT ON SUPPLY CHAINIMPACT OF IT ON SUPPLY CHAIN
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y Information processing is one of the
central functions of SCM.
y IT could make two contributions in the
SCM :x Improvement in information sharing among firms.
x Prompt problem identification and optimization.
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y Introduction of Electronic DataInterchange (EDI) -Web-EDI
y
Enterprise Resource Planning.
y The development of application software.
- Supply Chain Planning Software (SCPS.)
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Impact of internet/ eImpact of internet/ e--commerce oncommerce on
supply chainsupply chain
1. Cost efficiency
2. Changes in the distribution system
3. Customer orientation
4. Shipment tracking
5. Shipping notice
6. Freight auditing
7. Shipping documentation and labeling
8. Online shipping enquiry
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Advantage of SCMAdvantage of SCM
y Reduce total cost .
y The cost can also be reduced in relation to
the integrated advantage.
- avoiding redundant investment in
warehousing, and reducing inventory level
by information sharing.
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y The firms in the supply chain should have thenecessary abilities and should share reasonable
responsibilities (risk sharing).
y Various information, such as ordering, inventory
or customer demand, among others, should be
shared and processed properly.
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DisadvantagesDisadvantages
y Heavy investment of time, money, andresources
y Compare and negotiate with suppliers in the
terms of price, consistency, and quality.
y Outsourcing to foreign countries to save money
can cause backlash from the media, current
customers, as well as possible future customers.
y Backlash from the media, current customers, aswell as possible future customers .
y Power must be evenly distributed throughout
the supply chain.
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SCM aims to :
The right
Product
Higher
ProfitsThe right
Time
The right
Customer
The right
Quantity
The right
Store
The right
Price=++ ++ +
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Thank you!
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ReferencesReferences
y Introduction to supply chain management by
Robert B. Handfield & Ernest L. Nichols, Jr.
y Logistics Management,The Supply Chain
Imperative by VinodV. Sopley www.wikipedia.org
y www.investopedia.com