1. Supply Chain Management
Business Mantras
Supply Chain Management
Presented by:
Priyanka singh

2. Structure Followed What is Supply chain? Objective of a supply chain
Supply Chain Management
Bull Whip effect
Drivers of Supply chain performance
Inventory policies
Types of Distribution networks

3. What is Supply chain?
Consists of all parties involved, directly or indirectly, in fulfilling a customer request
Supplier
Manufacturer
Distributor
Retailer
Customer

4. Is supply chain so simple?
Supplier
Manufacturer
Distributor
Retailer
Customer
Supplier
Manufacturer
Distributor
Retailer
Customer
Dell
Supplier
Manufacturer
Distributor
Retailer
Customer
Upstream
Downstream

5. Process View Customer Pull Retailer Distributor Push Manufacturer
Customer Order Cycle
Pull
Retailer
Replenishment Cycle
Distributor
Manufacturing Cycle
FMCG
Push
Manufacturer
Procurement Cycle
Supplier

6. Objective of a Supply Chain
Maximise overall profit
Profit
Revenue generated from customer - costs incurred along the entire chain
(e.g. manufacturing / storing / distributing the product)
When is Supply chain effective?
Manage Product, Information and Fund flow

7. what is SCM?
Objective is to be able to have the right products in the right quantities (at the right place) at the right moment at minimal cost.

8. Bull Whip Effect
Each organisation seek to solve the problem from its own perspective
Small changes in consumer demand result in large variations in orders placed upstream
Dramatic order size variation
Amplification of order size variation as one moves up the supply chain
Pampers Diapers
Delay 2 weeks
Delay 2 weeks
Delay 2 weeks
Supplier
Manufacturer
Distributor
Retailer
Customer
Orders 40
Orders 25
Orders 15
Buys 10

9. Causes Little or no communication between supply chain partners.
Delay times between order processing, demand, and receipt of products.
Over reacting to the backlog orders.
Inaccurate demand forecasts.

10. Drivers of Supply Chain Performance
Facilities
Production/Storage Sites
Responsiveness Vs Efficiency
Toyota

11. Drivers of Supply Chain Performance
Inventory
Raw materials
WIP
Finished Goods
Responsiveness Vs Efficiency
Sourcing
Outsourcing
Transportation

12. Transportation Total costs Cost Transport costs Inventory costs Rail
Air

13. Inventory Where do we hold inventory? Types of Inventory
Suppliers and manufacturers
warehouses and distribution centers
retailers
Types of Inventory
raw materials
WIP
finished goods
Why do we hold inventory?
Uncertainty in supply and demand
Lead Time
Avoid stock outs (customer goodwill)

14. Terms Involved Inventory lot size Replenishment Lead time Stock out
Reorder Point
Safety stock

15. Relevant Costs in an Inventory System
Procurement costs
Ordering cost (appx. administrative, inspection, transportation etc.)
Holding costs
Maintenance and Handling
Taxes
Obsolescence
Stock-outs costs
Lost sales (Customer goodwill)
Backorders

16. Profile of Inventory Level Over Time
The Inventory Cycle
Profile of Inventory Level Over Time Q
Demand
rate
Constant Demand
Quantity
on hand
Reorder
point
Time
Receive
order
Place
order
Receive
order
Place
order
Receive
order
Lead time

17. Decisions When to order How much to order Types of System
Continuous Review
Periodic Review

18. EOQ: A View of Inventory
Note:
• No Stockouts
• Order when no inventory
• Order Size determines policy
Inventory
Order
Size
Time

19. EOQ - Cost Minimization Goal
The Total-Cost Curve is U-Shaped
Annual Cost
Holding Costs
Ordering Costs
Order Quantity (Q) QO
(optimal order quantity)
or EOQ

20. EOQ: Important Observations
Tradeoff between set-up costs and holding costs when determining order quantity.
Total Cost is not particularly sensitive to the optimal order quantity

21. Types of System – Continuous Review
Continuously monitored
R – Reorder point, L – Lead time
Q – Order quantity
Time b/w orders vary but Q is fixed

22. Periodic Review Monitored at periodic intervals of length “r”
Quantity set as the amount consumed during this interval
Time b/w orders fixed

23. Distribution
Steps taken to move and store a product from supplier to customer
Design Options
Manufacturer storage with direct shipping
Manufacturer storage with direct shipping and in-transit merge
Distributor storage with package carrier delivery

24. Manufacturer storage with direct shipping
Retailer
Customers
Drop Shipping

25. Manufacturer storage with direct shipping and in-transit merge
Retailer
In-transit Merge by carriers
Customers

26. Distributor storage with carrier delivery
Manufacturer
Warehouse Storage by Distributor/Retailer
Customers

27. To Summarize Components of supply chain (SC)
Objective of SC is to max. profit
Bull whip effect
Facilities decisions
Inventory policies
Distribution networks

28. Thank You