This document provides an introduction to logistics and supply chain management. It discusses key concepts like the objectives of SCM, stages of the supply chain, important SCM concepts like forecasting, inventory, strategy, planning, operations, and logistics. It defines SCM as the management of the flow of goods and information from raw materials to delivering the product to the final customer. The overall goal of SCM is to maximize the value generated for the customer at the lowest possible cost.
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Module 1.1
This document provides an introduction to logistics and supply chain management. It discusses key concepts like the objectives of SCM, stages of the supply chain, important SCM concepts like forecasting, inventory, strategy, planning, operations, and logistics. It defines SCM as the management of the flow of goods and information from raw materials to delivering the product to the final customer. The overall goal of SCM is to maximize the value generated for the customer at the lowest possible cost.
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Introduction to SCM
MODULE 1 MEC702 LOGISTICS AND SUPPLY CHAIN MANAGEMENT
LOGISTICS AND SUPPLY CHAIN MANAGEMENT 1
Syllabus • Objectives of a Supply Chain Management, Stages of Supply Chain, Value Chain Process, Cycle view of Supply Chain Process, Key Issues in SCM, Logistics & SCM, Supply Chain Drivers / Decisions and Obstacles, Supply Chain strategies, Strategic Fit, Best practices in SCM, Obstacles of Streamlined SCM. • Supplier Selection, Supplier Quality Audits, Contract Management, Non- Disclosure Agreement (NDA), Make and Buy Decision while in-out sourcing.
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Supply Chain Management • A supply chain consists of all parties involved, directly or indirectly, in fulfilling a customer request. • The supply chain includes not only the manufacturer and suppliers, but also transporters, warehouses, retailers, and even customers themselves. • Within each organization, such as a manufacturer, the supply chain includes all functions involved in receiving and filling a customer request. • These functions include, but are not limited to, new product development, marketing, operations, distribution, finance, and customer service. • Supply Chain Management (SCM) is the management of the flow of goods, data, and finances related to a product or service, from the procurement of raw materials to the delivery of the product at its final destination. LOGISTICS AND SUPPLY CHAIN MANAGEMENT 3 LOGISTICS AND SUPPLY CHAIN MANAGEMENT 4 Supply Chain Animation Detergents
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Objectives of a Supply Chain Management • The objective of every supply chain should be to maximize the overall value generated. • The value a supply chain generates is 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. • For most commercial supply chains, value will be strongly correlated with supply chain profitability (also known as supply chain surplus), the difference between the revenue generated from the customer and the overall cost across the supply chain.
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Stages of SCM A typical supply chain may involve a variety of stages. These supply chain stages include: • Customers • Retailers • Wholesalers/distributors • Manufacturers • Component/raw material suppliers
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Stages of SCM
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Stages of SCM • Each stage in a supply chain is connected through the flow of products, information, and funds. • These flows often occur in both directions and may be managed by one of the stages or an intermediary. • Each stage in the figure mentioned in previous slide need not be present in a supply chain. • The appropriate design of the supply chain depends on both the customer's needs and the roles played by the stages involved.
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Important Concepts of SCM • Forecasting • Inventory • Strategy • Planning • Operations • Logistics
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Forecast • Supply chain forecasting refers to the process of predicting demand, supply or pricing for a product — or a range of products — in a particular industry. • Supply chain forecasting combines data from past supply with insights and understandings about demand, to help make the best decisions for the business – whether it’s stock inventory, cargo booking, budget planning or expanding to new markets. • Analyzing supply • Analyzing demand
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LOGISTICS AND SUPPLY CHAIN MANAGEMENT 12 Inventory • Inventory is the goods or materials a business intends to sell to customers for profit. • Inventory management, a critical element of the supply chain, is the tracking of inventory from manufacturers to warehouses and from these facilities to a point of sale. • The goal of inventory management is to have the right products in the right place at the right time.
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Inventory Inventory Management
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Strategy • A supply chain strategy is a formal approach to managing the network between an organization and its suppliers. • A supply chain strategy is like a roadmap that helps companies get their products to customers with as little friction as possible. • This plan ensures that every phase of the supply chain is optimized, including the sourcing of materials, manufacturing, delivery, and logistics. • Four factors usually influence an organization’s supply chain strategy: Industry, Company value proposition, Internal decision-making processes and Business goals
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LOGISTICS AND SUPPLY CHAIN MANAGEMENT 16 Planning • Supply chain planning (SCP) is the forward-looking process of coordinating assets to optimize the delivery of goods, services and information from supplier to customer, balancing supply and demand. • Supply chain planning is the process of anticipating demand and planning materials and components to meet that demand, along with production, marketing, distribution and sales. • The objective of planning is to balance supply and demand and ensure that sales revenue opportunities are fully exploited in a timely manner.
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LOGISTICS AND SUPPLY CHAIN MANAGEMENT 18 Operations • Supply chain operations include the systems, structures and processes to plan and execute the flow of goods and services from supplier to customer. • To maximize effectiveness, it is critical to evaluate both internal operations and the extended supply chain that includes suppliers and customers. • Supply chain management operations govern the overall structure of how a business plans, creates, receives, and fulfills products. • Often referred to as OSCM (operations and supply chain management), it involves monitoring, maintaining, and improving a wide spectrum of both internal and collaborative processes.
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LOGISTICS AND SUPPLY CHAIN MANAGEMENT 20 Logistics • Logistics is the process of planning and executing the efficient transportation and storage of goods from the point of origin to the point of consumption. • The goal of logistics is to meet customer requirements in a timely, cost- effective manner. • Many companies specialize in logistics, providing the service to manufacturers, retailers and other industries with a large need to transport goods. • Some own the full gamut of infrastructure, from jet planes to trucks, warehouses and software, while others specialize in one or two parts. FedEx, UPS and DHL are well-known logistics providers.