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Chapter 13 Introduction To Supply Chain

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50 views

Chapter 13 Introduction To Supply Chain

Uploaded by

dubeyvimal389
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Chapter-13

Introduction to supply chain


management

By Prof. Meena Mashru


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 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
• 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.
Example: Walmart and “Big Box” Retailers
The “Big Box” store, which represents one of the major disruptions of the retail model from the last century,
thrives on size, ubiquity, and well-planned supply chains to drive out the competition. How else would a
company like Walmart make a profit on a t-shirt made overseas that retails for $5.00?

Walmart succeeds by having fewer links in its supply chain, and buying more generic goods directly from
manufacturers, rather than from suppliers with brand names and markup. It uses “Vendor Managed Inventory” to
mandate that manufacturers are responsible for managing products in warehouses owned by Walmart. The
company is also is particularly choosy with suppliers, partnering only with those who can meet the quantity and
frequency it demands with low prices, and with locations that limit transportation needs. They manage their
supply chain like one firm, with all partners operating on the same communication network.

By buying at large enough quantities to take advantage of economies of scale, moving products directly from
manufacturers to warehouses, and then delivering to stores which are large enough to be distribution centers, it
reduces links in the supply chain and cost per item, translating to low prices for consumers.
Example: Amazon and “Ecommerce Platforms”

Having overtaken Walmart as the world’s largest retailer in the last decade, Amazon’s
“online big box” concept is a perfect example of unique supply chains. As an e-commerce
shop, obviously they cut the retail store out and ship from distribution center to consumer’s
homes directly. Where Amazon innovates is both in its supplier-side and its final supply
chain link - delivery.

Just about anyone can sell things on Amazon because it’s a platform, not just a shop. As a
result, Amazon has more things than any other online store, so when people shop online,
they think of Amazon. Then, it produces everyday goods cheaply, and underbids suppliers.
Next, their warehouses make serious use of automation to store items going to like
destinations together, ready for immediate transport. Finally, its investments in delivery staff
and technology make 2-day shipping a basic expectation, and even same-day delivery a
possibility. Amazon ditches third-party logistics (3PL) and fulfills orders itself.

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