1. INTERNATIONAL SUPPLY CHAIN MANAGEMENT AND LOGISTICS
MIB- PAPER 545

2. CONTENTS SECTION A 1. Basic framework 2. Integrated SCM
3. Managing Relationship
4. Purchasing process
5. SCM and Information management
SECTION B
6. Logistic system
7. Transport fundamentals
8. General structure of shipping
9. International air transport
10. Sea transport
11. Warehousing and inventory management

3. BASIC FRAMEWORK OF SUPPLY CHAIN MANAGEMENT

4. MEANING :
A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers.

5. SUPPLY CHAIN STAGES
First of all the Raw Materials goes to the Manufacturer where Raw Materials are converted into Finished Goods. After that the Goods are supplied to Distributor & Retailer with the help of various Modes of Transport which comes to an end with Customer.
Supplier
Manufacturer
Distributor
Retailer
Forwarding Agent
Customer

6. SUPPLY CHAIN MANAGEMENT
Supply chain management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain as efficiently as possible. Supply Chain Management spans all movement and storage of raw materials, work-in-process inventory and finished goods from point-of-origin to point-of-consumption.

7. SUPPLY CHAIN MANAGEMENT
Supply chain management (SCM) is a process of integrating/utilizing suppliers, manufacturers, warehouses and retailers, so that goods are produced and delivered at the right quantities, and at the right time, while minimizing costs as well as satisfying customer requirements.

8. SUPPLY CHAIN EXISTENCE
Supply chains exist in both service and manufacturing organizations, although the complexity of the chain may vary greatly from industry to industry and firm to firm.

9. Supply Chain Flows
Supply chain execution is managing and coordinating the movement of materials, information and funds across the supply chain.
Manufacturer
Consumer
Materials Flow
Information Flow
Monetary Flow

10. Objective of Supply Chain
The objective of Supply chain concept is to synchronize the service requirements of the customer with the flow of materials from suppliers, such that the apparent contradictory situation of conflicting goals of high customer service, low inventory investment and low operating costs may be balanced (or optimized).

11. Components of SCM
Plan : This is the strategic portion of SCM. You need a strategy for managing all the resources that go toward meeting customer demand for your product or service.
Source : Choose the suppliers that will deliver the goods and services you need to create your product. Develop a set of pricing, delivery and payment processes with suppliers and create metrics for monitoring and improving the relationships.
Make : Schedule the activities necessary for production, testing, packaging and preparation for delivery.
Deliver : Coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to get products to customers and set up an invoicing system to receive payments.
Return : Create a network for receiving defective and excess products back from customers and supporting customers who have problems with delivered products.

12. KEY ISSUES IN SUPPLY CHAIN MANAGEMENT

13. Today’s Supply Chain Reality
Increased outsourcing
Large global supply networks
Increased competition
Consumer driven

14. SUPPLY CHAIN DECISIONS

15. STRATEGIC DECISIONS
Strategic network optimization, including the number, location, and size of warehouses, distribution centers and facilities.
Strategic partnership with suppliers, distributors, and customers, creating communication channels for critical information and operational improvements.
Product design coordination, so that new and existing products can be optimally integrated into the supply chain, load management
Information Technology infrastructure, to support supply chain operations.
Where-to-make and what-to-make-or-buy decisions
Aligning overall organizational strategy with supply strategy.

16. TACTICAL DECISIONS Sourcing contracts and other purchasing decisions.
Production decisions, including contracting, locations, scheduling, and planning process definition.
Inventory decisions, including quantity, location, and quality of inventory.
Transportation strategy, including frequency, routes, and contracting.
Benchmarking of all operations against competitors and implementation of best practices throughout the enterprise.
Milestone payments

17. OPERATIONAL DECISIONS
Daily production and distribution planning, including all nodes in the supply chain.
Production scheduling for each manufacturing facility in the supply chain (minute by minute).
Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the forecast with all suppliers.
Sourcing planning, including current inventory and forecast demand, in collaboration with all suppliers.
Inbound operations, including transportation from suppliers and receiving inventory.
Production operations, including the consumption of materials and flow of finished goods.
Outbound operations, including all fulfillment activities and transportation to customers.
Order promising, accounting for all constraints in the supply chain, including all suppliers, manufacturing facilities, distribution centers, and other customers. 

18. Supply Chain Management Software
Today IT industry has developed various Software's which helps the Company to store their current data and also anticipate their future needs relating to Supply System with the help of Surveys at different levels.
E.g.- SAP, Lotus etc.

20. CONCLUSION
Thus from supply to supply chain to supply chain system to supply chain management, we can conclude that in the present scenario of globalization , liberalization & privatization, the effective management of supply chain system is very essential for medium & large scale companies if they want to portray a lasting image in international market.

21. LOGISTICS

22. SEVEN R’s DESCRIBING LOGISTICS
RIGHT
PRODUCT
RIGHT
PRICE
RIGHT
QUANTITY
LOGISTICSOF
INCOME
RIGHT
CONDITION
RIGHT
CUSTOMER
RIGHT
TIME
RIGHT
PLACE

23. LOGISTICS
The process of planning, implementing and controlling the efficient, cost-effective flow and storage of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.
- Council of Logistics Management

24. LOGISTICS CREATES COMPETITIVE ADVANTAGE
Optimizes operations cost and productivity.
Efficient utilization of assets.
Facilitating internal business fulfillment functions.
Integrating external channel suppliers.
Achieving conformance to performance requirements.

25. FUNCTIONAL DEFINITION OF LOGISTICS
Inbound Logistics
Functions
Outbound Logistics
Functions
LOGISTICS
MANAGEMENT
MATERIALS
MANAGEMENT
PHYSICAL
DISTRIBUTION
MANAGEMENT

28. SCM AND LOGISTICS
The science of logistics has evolved from a purely operation function to a competitive weapon capable of providing goods and services to the farthest regions of the supply chain.

30. VALUE CHAIN ANALYSIS

31. ORIGIN OF THE CONCEPT
The value chain, also known as value chain analysis, is a concept from business management that was first described and popularized by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance.

32. MEANING A value chain is a chain of activities.
Products pass all activities of the chain in order and at each activity the product gains some value.
The chain of activities gives the products more added value than the sum of added values of all activities.

33. PRIMARY VALUE CHAIN ACTIVITIES
Inbound Logistics: the receiving and warehousing of raw materials, and their distribution to manufacturing as they are required.
Operations: the processes of transforming inputs into finished products and services.
Outbound Logistics: the warehousing and distribution of finished goods.
Marketing & Sales: the identification of customer needs and the generation of sales.
Service: the support of customers after the products and services are sold to them.

34. SUPPORT ACTIVITIES
The infrastructure of the firm: organizational structure, control systems, company culture, etc.
Human resource management: employee recruiting, hiring, training, development, and compensation.
Technology development: technologies to support value-creating activities.
Procurement: purchasing inputs such as materials, supplies, and equipment.

35. PORTER’S GENERIC VALUE CHAIN

36. SCOPE OF THE CONCEPT- THE VALUE SYSTEM
Supplier Value Chain
Channel Value Chain
Buyer Value Chain
>
Firm Value Chain
>
>

37. BUILDING COMPETITIVE ADVANTAGE
Cost advantage: by better understanding costs and squeezing them out of the value-adding activities.
Differentiation: by focusing on those activities associated with core competencies and capabilities in order to perform them better than do competitors.

38. LINKAGES BETWEEN VALUE CHAIN ACTIVITIES
Value chain activities are not isolated from one another.
Rather, one value chain activity often affects the cost or performance of other ones.
Linkages may exist between primary activities and also between primary and support activities.

39. ANALYZING BUSINESS UNIT RELATIONSHIPS
Interrelationships among business units form the basis for a horizontal strategy.
Such business unit interrelationships can be identified by a value chain analysis.
Tangible interrelationships offer direct opportunities to create a synergy among business units.

40. OUTSOURCING VALUE CHAIN ACTIVITIES
Whether the activity can be performed cheaper or better by suppliers.
Whether the activity is one of the firm's core competencies from which stems a cost advantage or product differentiation.
The risk of performing the activity in-house (if the activity relies on fast-changing technology or the product is sold in a rapidly-changing market).
Whether the outsourcing of an activity can result in business process improvements such as reduced lead time, higher flexibility, reduced inventory, etc.

41. INTERNATIONALIZATION OF SUPPLY CHAIN MANAGEMENT

42. INTERNATIONAL SUPPLY CHAIN MANAGEMENT
International supply chain management is domestic supply chain management spread over a larger geographic area.

43. FORCES THAT DRIVE THE TREND TOWARDS GLOBALIZATION:
Global market forces
Pressures created by foreign competitors
Opportunities created by foreign customers
Technological forces
Global cost forces
Political and economic forces
Regional trade agreements
Avoiding tariffs or quotas

44. INTERNATIONAL SUPPLY CHAIN SYSTEMS

45. 1. INTERNATIONAL DISTRIBUTION SYSTEMS
Manufacturing occurs domestically, but distribution and some marketing takes place overseas.
2. INTERNATIONAL SUPPLIERS
Raw materials and components are furnished by foreign suppliers, but final assembly is performed domestically.
In some cases, the final product is then shipped to foreign markets.

46. 3. OFFSHORE MANUFACTURING
The product is typically sourced and manufactured in a single foreign location.
It is then shipped back to domestic warehouses for sale and distribution.
4. FULLY INTEGRATED GLOBAL SUPPLY CHAIN
The products are supplied, manufactured, and distributed form various facilities located throughout the world.

47. ADVANTAGES AND RISKS: Advantages
Vast economies of scale in terms of production, management, distribution, marketing.
Increase in potential markets, sales and profits.
Risks
Fluctuating exchange rates.
Customer reactions, competitor reactions, supplier reactions, government reactions.

48. ADDRESSING GLOBAL RISKS
Speculative strategies – a company bets on a single scenario.
Hedge strategies – any losses in the supply chain are offset by gains in another part.
Flexible strategies – a company takes advantage of different scenarios by having multiple suppliers and excess manufacturing capacities in different countries.
Production shifting- e.g. factory relocation
Information sharing – anticipate market changes & find new opportunities
Global coordination

49. REQUIREMENTS FOR GLOBAL STARTEGY IMPLEMENTATION
Michael Mcgarth and Richard Hoole:
Product development
Purchasing- qualified management team
Production
excess capacity and plants in several region
Interfactory communication & centralized management
Demand management
Order fulfillment

50. ISSUES IN INTERNATIONAL SUPPLY CHAIN MANAGEMENT

51. INTERNATIONAL V/S REGIONAL PRODUCTS
Region-specific products
Even if regional designs are different, effective supply chain management can take advantage of common components or subassemblies within the different designs.
True global products
Coca-cola, Levi’s jeans, McDonald burger.
Essentially distributed and sold in the same way throughout the world.

52. LOCAL AUTONOMY V/S. CENTRAL CONTROL
Centralized control can be important in taking advantage of the global opportunities but in many cases, it is beneficial to allow local autonomy in the supply chain.

53. MISCELLANEOUS DANGERS
Exchange rate fluctuations.
Administration of offshore facilities.
Cheap but unskilled labour.
Collaborators becoming competitors.
Foreign governments.

54. DIFFERENCES THAT MANAGERS MUST CONSIDER WHEN DESIGNING INTERNATIONAL SUPPLY CHAINS.
Cultural differences- language, beliefs, customs.
Infrastructure- highway systems, ports, communication and information systems, advanced manufacturing techniques
Performance expectation and evaluation- operating standards with regards to contracts, environmental regulations, formal partnership contracts, research and development, role of government, customer service measures.
Information system availability
Human resources

55. MAJOR DIFFERNECES BETWEEN DIFFERENT REGIONS
First world
Emerging
Third world
Infrastructure
Highly
developed
Under
development
Insufficient to support advanced logistics
Supplier
Operating
Standards
High
Variable
Typically not
considered
Information system
availability
Generally
available
Support system not available
Not available
Human
resources
Available
Available with some differences
Often difficult to find

56. CONCLUSION
International supply chains covers the spectrum from domestic supply chains with some international product distribution to a fully integrated global supply chain. A successful international supply chain requires true flexibility in operations and in spirit with a clear understanding of regional logistics differences.