Post Graduate

Strategic Supply Diploma in SCM

Chain Management

Strategic supply chain Management

Session # 1

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Md. Shakhawat Hossain, CSCM, CPLM, MCIPS
M.B.A. (Finance) - DU
B.Sc. Engg. (EEE) – BUET

Career
CEO, Eco Threads & Yarns, Color City of DBL Group
Supply Chain & IT Director – Amann Bangladesh
Chief Supply Chain & IT Officer – American & Efird Bangladesh
Head of Supply Chain & IT – Coats Bangladesh
Head of KT/IT – Holcim Bangladesh
IT Executive – Beximco Textiles
ISA Officer – Philips Bangladesh

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 Topics will be covered

• Strategic supply chain Management

• Supply Chain Performance:
– Achieving Strategic Fit and Scope
• Supply Chain Drivers and Obstacles
• Designing Distribution Networks
• Demand forecasting in a supply chain
• Information Technology and The Supply Chain
• Coordination in the supply chain.

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 Understanding the Supply Chain

• What is a Supply Chain

• Objectives of a Supply Chain
• Decision Phases in a Supply Chain
• Process Views of a Supply Chain

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 What is Supply Chain Management

Supply Chain Management includes planning and

management of all stages that are involved directly or
indirectly in fulfilling customer request. Importantly, it also
includes coordination and collaboration with channel
partners, which can be suppliers, intermediaries, third-
party service providers, and customers. In essence, supply
chain management integrates supply and demand
management within and across companies.

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 What is Supply Chain Management

Supply Chain Management is an integrating function

with primary responsibility for linking major business
functions and business processes within and across
companies into a cohesive and high-performing business
model. It includes all of the logistics management
activities noted above, as well as manufacturing
operations, and it drives coordination of processes and
activities with and across marketing, sales, product
design, finance, and information technology.”
(Source: http://cscmp.org/aboutcscmp/definitions.asp)

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 Why SCM is Important
Two main reasons – money and opportunity. In the US about 10
percent of gross domestic product, or almost $1 trillion, is spent on
supply chain activities. Advances in information technology (IT) and
the expanding IT infrastructure, and globalization are introducing
new possibilities to improve service and efficiencies, and given the
amount of money at stake, the opportunities are high.

In years past, manufacturers were the drivers of the supply chain —

managing the pace at which products were manufactured and
distributed. Today, customers are more demanding, and
manufacturers are scrambling to meet customer demands for
options / styles / features, quick order fulfillment, and fast delivery.

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 What is a Supply Chain
• All Stages involved directly or indirectly, in fulfilling a customer request
• Includes manufacturers, suppliers, transporters, warehouses, retailers,
and customers
• Within each company, the supply chain includes all functions involved
in fulfilling a customer request (product development, marketing,
operations, distribution, finance, customer service)
• Customer is an integral part of the Supply Chain
• SCM includes movement of products from suppliers to manufacturers
to distributors. It also includes movement of information, funds, and
products in both direction
• Its more accurate to use the term “supply network” or “supply web”
• A supply chain is a network of all firms and relationships that get a product to
market, including the original acquisition of raw materials; production of the
item at a manufacturing facility; distribution to a retailer; sale of the finished
item to the customer, and any installation, repair, or service activities that
follow the sale.

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 What is a Supply Chain

Customer wants
P&G or other Jewel or third Jewel
detergent and goes
manufacturer party DC Supermarket to Jewel

Plastic Tenneco Chemical

Producer Packaging manufacturer
(e.g. Oil Company)

Chemical
Paper Timber
manufacturer
(e.g. Oil Company) Manufacturer Industry

Typical Supply Chain stages include : customers, retailers, distributors,

manufacturers and suppliers (all stages may not be included in all supply chains)

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 What is a Supply Chain

Information

Product
Customer
Funds

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Flow of Demand Model

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 The Objective of a Supply Chain

• The objective of every Supply Chain is to maximize

the overall value generated

• Value : The difference between what the final

product is worth to the customer and the costs the
supply chain incurs in filling the customer’s request.

• Value is strongly correlated with supply chain

profitability (also known as supply chain surplus)

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 Supply Chain Surplus / Profitability

• Supply chain profitability or surplus is the total profit

to be shared across all supply chain stages and
intermediaries

• The higher the supply chain profitability, the more

successful is the supply chain

• Supply Chain success should be measured in terms of

supply chain profitability and NOT in terms of the
profits at individual stages

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 Sources of Revenue / Cost in the supply chain
• The customer is only one source of revenue for any
supply chain.
• Customer is the only one providing positive cash flow for
the supply chain.
• Other cash flows are simply fund exchanges that occur
within the supply chain.
• All flows of information, product, or funds generate costs
within the supply chain.
• Effective supply chain management involves the
management of supply chain assets and products,
information, and fund flows to maximize the total supply
chain profitability.

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 Decision Phases in a Supply Chain

• Supply Chain Strategy or Design

• Supply Chain Planning

• Supply Chain Operation

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 Supply Chain Strategy or Design

• During this phase, given the marketing and pricing

plans for a product, a company decides how to
structure the supply chain over the next several years.

• Strategic supply chain decisions include –

• Locations and capacities of facilities
• Products to be made or stored at various locations
• Modes of transportation
• Information systems

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 Supply Chain Planning
• Definition of a set of policies that govern short-term
operations. Time frame considered is a quarter to a
year.

• Planning decisions include –

• Which markets will be supplied from which locations
• Planned buildup of inventories
• Subcontracting, backup locations
• Inventory Policies
• Timing and size of the market promotions

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 Supply Chain Operation

• During this phase companies make decisions regarding

individual customer orders. Time horizon here is weekly or
daily.
• At the operational level, supply chain configuration is
considered fixed, and planning policies are already defined.
• The goal of supply chain operation is to handle incoming
customer orders in the best possible manner.
• Allocate orders to inventory or production, set order due dates,
generate pick lists at the warehouse, allocate an order to a
particular shipment, set delivery schedules, place
replenishment orders.
• Uncertainty at this phase is much less (as the time horizon is
short)

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 Process Views of a Supply Chain
• A Supply Chain is a sequence of processes and flows that take
place within and between different stages and combine to fill a
customer need for a product.

• Two ways to view the processes performed in a supply chain –

• Cycle View: The processes in a supply chain are divided into
a series of cycles, each performed at the interface between
two successive stages of a supply chain.
• Push/Pull View: processes in a supply chain are divided into
two categories depending on whether they are executed in
response to a customer order or in anticipation of customer
orders. Pull processes are initiated by a customer order,
whereas Push processes are initiated and performed in
anticipation of customer orders.

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 Cycle View of Supply Chain Process

•The processes in a supply chain are divided into a series of

cycles, each performed at the interface between two
successive stages of a supply chain.
Customer
• Supply Chain processes can be Customer Order Cycle
broken down into the Retailer
following four process cycles –
•Customer order cycle Replenishment Cycle
•Replenishment cycle Distributor
•Manufacturing cycle
•Procurement cycle Manufacturing Cycle
Manufacturer
Procurement Cycle
Supplier

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 Customer Order Cycle

•The customer order cycle occurs at the customer and

retailer interface and include all process directly
involved in receiving and filling the customer order.

• This includes –

• Customer Arrival
• Customer order entry
• Customer order fulfillment
• Customer order receiving

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 Replenishment Cycle
• The replenishment occurs at the retailer and distributors
interface and include all process involved in replenishing retailer
inventory.

• It is initiated when a retailer place an order to replenish

inventory to meet future demand.
• This includes –
• Retail order triggers
• Retail order entry
• Retail order fulfillment
• Retail order receiving

• The objective of replenishment cycle is to replenish inventories

at the retailer at minimum cost while providing necessary
product availability to the customer.

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 Manufacturing Cycle
• The manufacturing cycle typically occurs at the
distributor and manufacturer interface and include all
process involved in replenishing distributors inventory.
• This includes –

• Order arrival from distributor, retailer or customer

• Production scheduling
• Manufacturing and shipping

• Receiving at distributor, retailer or customers

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 Procurement Cycle

• The procurement cycle occurs at the manufacturers /

supplier interface and includes all process necessary
to ensure that materials are available for
manufacturing to occur according to schedule.

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 Cycle View - Usefulness

• Cycle View is very useful when considering

operational decisions because it specifies the roles and
responsibilities of each member of supply chain and
the desired outcome of each process.

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 Supply Chain Macro Process in a firm
• All supply chain processes (as discussed in the two process
views) can be classified into the following three macro
processes –
• Customer Relationship Management (CRM): All processes
that focus on the interface between the firm and its
customers.
• Internal Supply Chain Management (ISCM): All processes
that are internal to the firm.
• Supplier Relationship Management (SRM): All processes
that focus on the interface between the firm and its
suppliers.
• Within a firm, all supply chain activities belong to one of the
three macro processes: CRM, ISCM and SRM
• Integration among the three macro processes is crucial for
successful supply chain management.

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 Supply Chain Macro Process in a firm

Supplier Firm Customer

SRM ISCM CRM

• Source ••Strategic
StrategicPlanning
Planning • Market
• Negotiate • Demand Planning • Price
• Buy • Supply Planning • Sell
• Design • Fulfillment • Call Center
Collaboration • Field Service • Order Management
• Supply
Collaboration

Figure : Supply Chain Macro Process

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SCM Process

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 Supply Chain Process Model
Information Technology
Human Resources
Finance
Technology

Marketing & Sales

Demand Generation
Customer
Suppliers Service Customers
Department
Supply Chain
Management
Demand Fulfilment

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 Supply Chain Process Model

Leadership & Strategy

Consumers
Marketing & Sales Customer
Service &
Dept.
Plan Supply Demand
Customers
Planning Planning
Suppliers Customers
Supplier Customer Service
Dying Management
Management
Inbound Distribution
Finishing
Logistics Management

Source Make Deliver

Information Technology
Human Resources
Finance
Technology
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Any Question?

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 PGDSCM
Strategic Supply Chain Management

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Materials Management