OME752 Supply Chain Management - UNIT 1

OME752 - SUPPLY CHAIN MANAGEMENT
UNIT I INTRODUCTION
Role of Logistics and Supply chain Management: Scope and Importance- Evolution of
Supply Chain - Decision Phases in Supply Chain - Competitive and Supply chain Strategies
– Drivers of Supply Chain Performance and Obstacles.
Supply Chain management Introduction
Supply Chain management can be defined as the management of flow of products and
services, which begins from the origin of products and ends with the product’s consumption at
the end-user.
Supply Chain Management can be defined as the management of flow of products and
services, which begins from the origin of products and ends at the product’s
consumption. It also comprises movement and storage of raw materials that are
involved in work in progress, inventory and fully furnished goods.
The main objective of supply chain management is to monitor and relate production,
distribution, and shipment of products and services. This can be done by companies
with a very good and tight hold over internal inventories, production, distribution,
internal productions and sales.
In the above figure, we can see the flow of goods, services and information from the
producer to the consumer. The picture depicts the movement of a product from the
producer to the manufacturer, who forwards it to the distributor for shipment. The
distributor in turn ships it to the wholesaler or retailer, who further distributes the
products to various shops from where the customers can easily get the product.
Supply chain management basically merges the supply and demand management. It
uses different strategies and approaches to view the entire chain and work efficiently at
each and every step involved in the chain. Every unit that participates in the process
must aim to minimize the costs and help the companies to improve their long term
performance, while also creating value for its stakeholders and customers. This
process can also minimize the rates by eradicating the unnecessary expenses,
movements and handling.
Here we need to note that supply chain management and supply chain event
management are two different topics to consider. The Supply Chain Event
Management considers the factors that may interrupt the flow of an effective supply
chain; possible scenarios are considered and accordingly, solutions are devised for
them.
Supply Chain Management - Advantages

In this era of globalization where companies compete to provide the best quality
products to the customers and satisfy all their demands, supply chain management
plays a very important role. All the companies are highly dependent on effective supply
chain process.
Let’s take a look at the major advantages of supply chain. The key benefits of supply
chain management are as follows −
 Develops better customer relationship and service.
 Creates better delivery mechanisms for products and services in demand with
minimum delay.
 Improvises productivity and business functions.
 Minimizes warehouse and transportation costs.
 Minimizes direct and indirect costs.
 Assists in achieving shipping of right products to the right place at the right time.
 Enhances inventory management, supporting the successful execution of just-in-
time stock models.
 Assists companies in adapting to the challenges of globalization, economic
upheaval, expanding consumer expectations, and related differences.
 Assists companies in minimizing waste, driving out costs, and achieving
efficiencies throughout the supply chain process.
These were some of the major advantages of supply chain management. After taking a
quick glance at the concept and advantages on supply chain management, let us take
a look at the main goals of this management.
Supply Chain Management - Goals

Every firm strives to match supply with demand in a timely fashion with the most
efficient use of resources. Here are some of the important goals of supply chain
management −
 Supply chain partners work collaboratively at different levels to maximize
resource productivity, construct standardized processes, remove duplicate
efforts and minimize inventory levels.
 Minimization of supply chain expenses is very essential, especially when there
are economic uncertainties in companies regarding their wish to conserve
capital.
 Cost efficient and cheap products are necessary, but supply chain managers
need to concentrate on value creation for their customers.
 Exceeding the customers’ expectations on a regular basis is the best way to
satisfy them.
 Increased expectations of clients for higher product variety, customized goods,
off-season availability of inventory and rapid fulfillment at a cost comparable to
in-store offerings should be matched.
 To meet consumer expectations, merchants need to leverage inventory as a
shared resource and utilize the distributed order management technology to
complete orders from the optimal node in the supply chain.
Lastly, supply chain management aims at contributing to the financial success of an
enterprise. In addition to all the points highlighted above, it aims at leading enterprises
using the supply chain to improve differentiation, increase sales, and penetrate new
markets. The objective is to drive competitive benefit and shareholder value.
Supply Chain Management - Process

Supply chain management is a process used by companies to ensure that their supply
chain is efficient and cost-effective. A supply chain is the collection of steps that a
company takes to transform raw materials into a final product. The five basic
components of supply chain management are discussed below −
Plan
The initial stage of the supply chain process is the planning stage. We need to develop
a plan or strategy in order to address how the products and services will satisfy the
demands and necessities of the customers. In this stage, the planning should mainly
focus on designing a strategy that yields maximum profit.
For managing all the resources required for designing products and providing services,
a strategy has to be designed by the companies. Supply chain management mainly
focuses on planning and developing a set of metrics.
Develop(Source)
After planning, the next step involves developing or sourcing. In this stage, we mainly
concentrate on building a strong relationship with suppliers of the raw materials
required for production. This involves not only identifying dependable suppliers but also
determining different planning methods for shipping, delivery, and payment of the
product.
Companies need to select suppliers to deliver the items and services they require to
develop their product. So in this stage, the supply chain managers need to construct a
set of pricing, delivery and payment processes with suppliers and also create the
metrics for controlling and improving the relationships.
Finally, the supply chain managers can combine all these processes for handling their
goods and services inventory. This handling comprises receiving and examining
shipments, transferring them to the manufacturing facilities and authorizing supplier
payments.
Make
The third step in the supply chain management process is the manufacturing or making
of products that were demanded by the customer. In this stage, the products are
designed, produced, tested, packaged, and synchronized for delivery.
Here, the task of the supply chain manager is to schedule all the activities required for
manufacturing, testing, packaging and preparation for delivery. This stage is
considered as the most metric-intensive unit of the supply chain, where firms can
gauge the quality levels, production output and worker productivity.
Deliver
The fourth stage is the delivery stage. Here the products are delivered to the customer
at the destined location by the supplier. This stage is basically the logistics phase,
where customer orders are accepted and delivery of the goods is planned. The delivery
stage is often referred as logistics, where firms collaborate for the receipt of orders
from customers, establish a network of warehouses, pick carriers to deliver products to
customers and set up an invoicing system to receive payments.
Return
The last and final stage of supply chain management is referred as the return. In the
stage, defective or damaged goods are returned to the supplier by the customer. Here,
the companies need to deal with customer queries and respond to their complaints etc.
This stage often tends to be a problematic section of the supply chain for many
companies. The planners of supply chain need to discover a responsive and flexible
network for accepting damaged, defective and extra products back from their
customers and facilitating the return process for customers who have issues with
delivered products.

OME752 Supply Chain Management - UNIT 1

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OME752 - SUPPLY CHAIN MANAGEMENT

Supply Chain management Introduction

Supply Chain Management - Advantages

Supply Chain Management - Goals

Supply Chain Management - Process

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