Presentation- Scm For Fdp-mit Kothrud_09.02.19.pdf

The Anatomy of Supply Chain Management

Narahari P. Wagh Director, Vector Engineering Solutions WELCOMES ALL THE RESPECTED PROFESSORS FOR Faculty Development Programme On Saturday, February 9th , 2019, At MIT COE Kothrud.

Humble Request – Kindly keep Your Mobiles on “OFF” OR “SILENT” Mode Please. Thanks.

In today’s International Market place

It is WRONG to assume that : •  Good Products and Services will sell themselves and •  Success today will carry forward into tomorrow OR for ever after

What is your Competitive Edge? •  •  •  •  • 

Provide Right environment for learning Provide Right learning Give Excellent and Updated Knowledge to Students Best Possible Practical Exposure Creating the Best Confidence to face the Industry & Business, when they Graduate •  Rendering Necessary Support and help as & when needed to them •  Out of the Classroom learning •  And all that at the least possible cost and in minimum possible time available to you. These are the backbones of your success!

On the other hand, Industry is also facing the problem of availability of good fresh engineers. Industry today demands the Smart, Skilled & Knowledgable Engineers Ready to be employed. Along with the theoretical knowledge , some Add on skills are mandatory.

+

[  

Learning Objectives By the end of this small session, you should be able to:  

Appreciate the evolution of supply chain management.   Understand the fundamentals and flows of supply chain management.   Recognize the significance of strategic supply chain management.   Discuss the main developments that are influencing supply chain management.   Explain Return on Investment and supply chain profit leverage.   Discuss the benefits of supply chain management.  

Supply Chain Management… “As the economy changes, as competition becomes more global, it is no longer company vs. company but supply chain vs. supply chain” Harold Sirkin (1994), Boston Consulting Group q …has

captured the imagination of more & more managers and business organizations

q …requires them to think beyond their organization – to think about their product in its entirety, from the origin of all goods (Mother Earth), up to the final customer, consumer or user q Therefore Supply Chain Consists of ???????  

Supply  Chain  Management…Defini5on     …is the management of the acquisition, transformation and delivery processes that enable and direct the flows of products & services – as well as the supporting reciprocal flows of information & funds – along a chain leading from the sources of the original inputs up to the end customers, all aimed at achieving the best possible customer service at the lowest possible cost. With the support of Technology

Fundamentals:   q A supply chain is a dynamic concept that involves the constant flow of resources (products, information, funds) amongst all the participants along the chain q It is essentially a system of interconnecting chains i.e. a supply network or a supply web

Examples of Latest Technologies

The Four Interrelated Flows in SCM 1. Product & Service Flows:

The value-adding flow, as products & services progress along the supply chain from point of origin to point of final use or consumption. Generally flow downstream the chain but also upstream (e.g. reprocessing) 2. Information Flows: The bi-directional flows of information throughout the chain – particularly on customer demand which “pulls” the supply chain, but also on supply conditions & eventual disruptions 3. Funds Flows: The flows of funds, mainly upstream (payments for goods & services received) but also in some cases downstream 4. Expertise & Technology Flows: Sharing in areas such as IT systems, SCM expertise, product design, marketing, developing joint SC performance indicators, etc.

The  Four  Interrelated  Flows  in  SCM:  an  example   Material  Flow   Funds  Flow   Informa5on  Flow           E&T  Flow          

Fruit   packing  

Orange   farm  

Food   processor  

Mother  Earth   Bauxite   mine  

Aluminium   smelter  

Aluminium   strip  mill  

Can     maker  

Distributor  

Retail   outlet  

Strategic  SCM  

(cont’d) q Key elements are the elimination of waste ## - especially inventory - and continuous improvement - Kaizen q Strategic SCM integrates supply & demand q Effective SCM strategies can provide a sustainable competitive advantage. Provided We Consider Following Factors : Ø  Globalization Ø  Outsourcing Ø  Location Ø  Product Life Cycle Ø  Time-based Competition Ø  e-business Ø  Ø 

Collaborative Planning, Forecasting & Replenishment Supply Chain Risk Management

@@

Other  Important  Factors  in  SCM   1. Purchasing / Procurement:  

As SCM evolves, so Purchasing also continues to grow in importance and today considers strategic supply issues far broader than just purchasing transactions or buying, making it critical to effective SCM

Other  Important  Factors  in  SCM   2.  Cross-docking:

Supplier  

Supplier  

(cont’d)

Supplier  

q  Brilliant & simple concept developed by Wal-Mart q  Substantially reduces inventory costs & lead-times, improving customer service q  Requires sophisticated systems to be well-managed End-­‐point   delivery  

End-­‐point   delivery  

End-­‐point   delivery  

End-­‐point   delivery  

End-­‐point   delivery  

End-­‐point   delivery  

Other  Important  Factors  in  SCM  

(cont’d)

3. The Bullwhip Effect:  

Even where demand is relatively stable, variability of inventory levels increases considerably as one moves back along the supply chain. This can be lessened by reducing uncertainty along the supply chain by: Sharing information on customer demand & Using the same supply policies, forecasting methods etc. 4. The Type of Supply Chain:

v  v   

Different types of organizations require different types of supply chains – this can be shown through a matrix linking uncertainty of demand with uncertainty of supply

The Type of Supply Chain... Hau  Lee’s   Uncertainty   Framework  

Low  Demand     Uncertainty     =  Func8onal     Products  

High  Demand     Uncertainty       =  Innova8ve   Products  

Low  Supply     Uncertainty     =  Stable          Process  

     EFFICIENT   SUPPLY     CHAIN  

RESPONSIVE     SUPPLY     CHAIN  

High  Supply     Uncertainty   =  Evolving   Process  

RISK-­‐HEDGE   SUPPLY     CHAIN  

AGILE     SUPPLY     CHAIN  

Types of Supply Chains - Examples q  Efficient Supply Chain (functional products and stable process): e.g. petrol, diesel, cement, groceries

q  Agile Supply Chain (innovative products with uncertain demand and evolving processes): innovative high-tech products, e.g. “smart” mobile phones

q  Risk-hedging Supply Chain (functional products with high supply uncertainty due to changing processes): seasonal products

q  Responsive Supply Chain (innovative products with high demand uncertainty but stable supply processes): e.g. fashion goods and music

Other  Important  Factors  in  SCM  

(cont’d)

5. Procter & Gamble’s Perfect Order System:      Has

driven major changes at P&G as an important metric of customer expectations:   Ø                 On-time

Ø  Ø  Ø 

Delivery Shipped complete Invoiced correctly With no damage in transit

Supply  Chain  Leverage  on  Profit   One of the most widely used business performance measures – particularly important in SCM - is the Return on Investment (ROI) or Return on Capital Employed (ROCE), i.e. the benefit received from assets, which is calculated as follows:

 

   

                                       ROI =  

Profit (or Net Income) Total Assets (or Capital Employed)

Supply  Chain  Leverage  on  Profit   ROI  can be broken down into two other important

financial ratios:   ROI    =            Profit                                  =                  Profit        x                  Sales                        Total  Assets                                            Sales                  Total  Assets     Now:  Profit  Margin      =                    Profit                                                                                                            Sales     And:    Asset  Turnover  =                              Sales                                                                                                      Total  Assets     Therefore:    ROI  =  Profit  Margin    x    Asset  Turnover  

(cont’d)

Greening the Supply Chain: The Reprocessing Flow q  The Reprocessing Flow is a critical part of “Greening the Supply Chain” q  The US Environmental Protection Agency (EPA) originally came up with the concept of the “4Rs of waste management”: Reduce, Reuse, Reallocate & Recycle (Best of all is to REFUSE to generate Waste) q  However, the growth and ongoing development of Remanufacturing must also be recognized as an important contributor to the greening of the supply chain

Greening  the  Supply  Chain:   The  5  R’s  of  Reprocessing   REDUCE:   The Reduction in use of materials, e.g. reduce solid waste, reduce packaging, etc. REUSE:   The Re-use of materials, e.g. returnable boxes, reusable packaging RE-ALLOCATE:   Extending the use of waste, e.g. -­‐  by products used for another purpose RECYCLE:   Collection and separation of material, e.g. waste paper, plastics, Al. beverage cans REMANUFACTURE:   Resource regeneration, e.g. reconditioning single-use cameras, printer cartridges

The  Sustainable  Supply  Chain   q  The concept of a sustainable SC, although relatively recent, is becoming increasingly important

q  It involves managing the SC - from raw materials to the final consumer, along with the reprocessing of any waste materials - with the objective of protecting the environment while also being socially responsible

q  The champions of sustainable SCM are no longer the manufacturers, but rather the retailers in response to public concerns

Supply Chain Management q  SCM has resulted in a major change in the way that we do business. q  Effective supply chain management strategies have many potential benefits: v  v  v  v  v  v 

Improved customer service Lower inventory & higher inventory turnover Higher productivity Shorter lead-times Improved ROI Increased market share

Thanks a Lot For Your Precious Time & Patient Listening.

Narahari P. Wagh Contact Details – Mob No.- +91 94235 06367, Mail ID – [email protected].