Supply chain management

1. Supply chain management
 PRESENTED TO : AMARJIT SIR  PRESENTED BY : KULWINDER KAUR
 MBA 2ND SEMESTER
 ROLL NO. 1734748

2. MEANING
 Supply chain management means the flow of goods and
service,involves the movement and storage of raw materials of work
in process inventory and of finished goods from point of view of
origin to point of consumption.
 ACCORDING TO GANESHAN & HARRISON:
“ supply chain is a network of facilities and distribution options that
perform the function of procurement of materials transportation of
these materials into intermediate and finished products ,and the
distribution of these products to consumers.”

3. ESSENTIALS FEATURES OF SUPPLY CHAIN
MANAGEMENT
 INTEGRATED BEHAVIOR : SCM incorporates integrates integration
of stakeholders from supplier to customers.
 MUTUALLY SHARING INFORMATION: infromation among channel
members is required , especially for planning and monitoring
processes.
 MUTUALLY SHARING CHANNEL RISK AND REWARDS: effective
SCM also requires mutually sharing risk and rewards that yield a
competitive advantages.
 FOCUS ON CUSTOMERS : supply chain succeeds if all the members
of supply chain have the same goal and the same focus serving
customers.

4. OBJECTIVES OF SCM
 Service orientation.
 System orientation.
 Competitiveness and
efficiency.
 Minimizing the time.
 Improving quality.
 Reduces transportation cost.
 Reduces warehousing cost.

5. INVENTORY CONTROL
 Inventory control is a planned approach of determining what
to order, when to order , how much to order and how much
to stock so that costs associated with buying and storing as
optimal without interrupting the production and sales.
 IT DEALS WITH TWO PROBLEMS :
 1 when should an order be placed ? ( order level)
 2 how much should be ordered ? ( order quantity )

6. INVENTORY CONTROL TECHNIQUES
 EOQ MODEL.
 ABC MODEL.
 FSN MODEL.
 SOS MODEL.
 RE-ORDER LEVEL.

7. EOQ MODEL
 Economic order quantity is the amount of inventory to be
ordered at one time for the purposes of minimizing annual
inventory cost.
 It is size of the order whic gives maximum economy in
purchasing.
 The quantity may be calculated with the help of following
formula :

8. GRAPHICAL METHOD OF EOQ
 In the fig.,it can be seen
that ordering cost of an
item is decreasing as the
size of the order is
increasing.
 Carrying cost is increasing
because firm keeps more
items in stock.

9. ABC ANALYSIS
 In ABC analysis materials are divided into a number of
categories for adopting a selective approach of material
control.
 ABC CLASSIFICATION SYSTEM :
 A – ITEMS : 15% of the items are of
the highest value and there
inventory accounts for 70% the total.
 B- ITEMS : 20% of the items are of
the intermediate value and there
inventory accounts for 20% of the total .
 C – ITEMS : 70% of items of materials which
contributes only 10% of value consumption.

10. FSN MODEL
 FSN analaysis , items are classified according to their rate of
consumption.
 The items are classified broadly into three groups:
 F- means Fast moving,
 S- means Slow moving,
 N- means Non- moving.
For example,fast moving items should be stored as near as
possible to the point of issue.
Slow moving items can be stored in the interior of the stores or
at the higher heights.

11. SOS ANALYSIS
 SOS ANALYSIS is based on the nature of supplies where in S
represents the seasonal items and OS represents the off
seasonal items.
 The analysis identifies items into:
1. Seasonal, but available only for a limited period,
2. Seasonal, but available throughout the year, and
3. Off- Seasonal items whose quantity is determined on
different considerations.

12. RE ORDER LEVEL
 Re order level is that level of materials at which a new order
for supply of materials is to be placed.
 Re order level =
Lead time in days × Daily Average Usage

13. Re order level diagram

14. ANY QUESTIONS?