1. Supply Chain Management
Saravanan J
For MASTER FOR BUSINESS
ADMINISTRATION

2. Presentation outline
• IT in supply chain
• Agile supply chain
• Reverse supply chain
• Agro supply chain

3. Supply chain
• Supply chains are principally concerned with the flow
of products and information between supply chain
member organizations—
– procurement of materials,
– transformation of materials into finished products,
– distribution of those products to end customers.
• Today’s information-driven, integrated supply chains
are enabling organizations
– To reduce inventory and costs,
– add product value,
– extend resources,
– accelerate time to market, and retain customers.

4. 17-4
Topics to be Discussed In
IT Supply Chain
• The Role of Information Technology in the Supply
Chain
• The Supply Chain IT Framework
• Customer Relationship Management
• Internal Supply Chain Management
• Supplier Relationship Management
• The Transaction Management Foundation
• The Future of IT in the Supply Chain
• Supply Chain Information Technology in Practice

5. IT in Supply Chain
• Supply chain management (SCM) is concerned
with the flow of products and information
between supply chain members' organizations.
• Recent development in technologies enables the
organization to avail information easily in their
premises.
• These technologies are helpful to coordinates the
activities to manage the supply chain.
• The cost of information is decreased due to the
increasing rate of technologies. In the integrated
supply chain model

6. IT in Supply Chain
(Fig.1) bi-directional arrow reflect the
accommodation of reverse materials and
information feedback flows.

7. 17-7
Role of Information Technology
in a Supply Chain
• Information is the driver that serves as the “glue” to create a
coordinated supply chain
• Information must have the following characteristics to be useful:
– Accurate
– Accessible in a timely manner
– Information must be of the right kind
• Information provides the basis for supply chain management
decisions
– Inventory
– Transportation
– Facility

8. 17-8
Characteristics of Useful
Supply Chain Information
• Accurate
• Accessible in a timely manner
• The right kind
• Provides supply chain visibility

9. 17-9
Use of Information
in a Supply Chain
• Information used at all phases of decision
making: strategic, planning, operational
• Examples:
– Strategic: location decisions
– Operational: what products will be produced
during today’s production run

10. 17-10
Use of Information
in a Supply Chain
• Inventory: demand patterns, carrying costs,
stockout costs, ordering costs
• Transportation: costs, customer locations,
shipment sizes
• Facility: location, capacity, schedules of a
facility; need information about trade-offs
between flexibility and efficiency, demand,
exchange rates, taxes, etc.

11. 17-11
Role of Information Technology
in a Supply Chain
• Information technology (IT)
– Hardware and software used throughout the
supply chain to gather and analyze information
– Captures and delivers information needed to
make good decisions
• Effective use of IT in the supply chain can
have a significant impact on supply chain
performance

12. 17-12
The Importance of Information
in a Supply Chain
• Relevant information available throughout
the supply chain allows managers to make
decisions that take into account all stages
of the supply chain
• Allows performance to be optimized for the
entire supply chain, not just for one stage –
leads to higher performance for each
individual firm in the supply chain

13. 17-13
The Supply Chain IT Framework
• The Supply Chain Macro Processes
– Customer Relationship Management (CRM)
– Internal Supply Chain Management (ISCM)
– Supplier Relationship Management (SRM)
– Plus: Transaction Management Foundation
• Macro Processes Applied to the Evolution of
Software

14. 17-14
Macro Processes in a Supply Chain
Supplier
Relationship
Management
(SRM)
Internal
Supply Chain
Management
(ISCM)
Customer
Relationship
Management
(CRM)
Transaction Management Foundation (TFM)

15. 17-15
Customer Relationship Management
• The processes that take place between an
enterprise and its customers downstream in
the supply chain
• Key processes:
– Marketing
– Selling
– Order management
– Call/Service center

16. 17-16
Internal Supply Chain Management
• Includes all processes involved in planning for and
fulfilling a customer order
• ISCM processes:
– Strategic Planning
– Demand Planning
– Supply Planning
– Fulfillment
– Field Service
• There must be strong integration between the
ISCM and CRM macro processes

17. 17-17
Supplier Relationship Management
• Those processes focused on the interaction
between the enterprise and suppliers that are
upstream in the supply chain
• Key processes:
– Design Collaboration
– Source
– Negotiate
– Buy
– Supply Collaboration
• There is a natural fit between ISCM and SRM
processes

18. 17-18
The Transaction Management
Foundation
• Enterprise software systems (ERP)
• Earlier systems focused on automation of simple
transactions and the creation of an integrated
method of storing and viewing data across the
enterprise
• Real value of the TMF exists only if decision
making is improved
• The extent to which the TMF enables integration
across the three macro processes determines its
value

19. 17-19
The Future of IT in the Supply Chain
• At the highest level, the three SCM macro
processes will continue to drive the evolution of
enterprise software
• Software focused on the macro processes will
become a larger share of the total enterprise
software market and the firms producing this
software will become more successful
• Functionality, the ability to integrate across macro
processes, and the strength of their ecosystems,
will be keys to success

20. Information and Technology -
Application of SCM
• In the development and maintenance of Supply chain's information
systems both software and hardware must be addressed.
• Hardware includes computer's input/output devices and storage media.
• Software includes the entire system and application programme used for
processing transactions management control, decision-making and
strategic planning.
– Recent development in Supply chain management software are:
1. A new software programme developed by Ross systems Inc. called Supply Chain
planning which is used for demand forecasting, replenishment & manufacturing tools for
accurate planning and scheduling of activities.
2. P&G distributing company and Saber decision Technologies resulted in a software
system called Transportation Network optimization for streamlining the bidding and
award process.
3. Logitility planning solution was recently introduced to provide a programme capable
managing the entire supply chain.

21. Information and Technology -
Application of SCM
• Electronic Data Interchange:
– Electronic Data Interchange (EDI) refers to computer-to-computer exchange of
business documents in a standard format. EDI describe both the capability and
practice of communicating information between two organizations electronically
instead of traditional form of mail, courier, & fax. The benefits of EDI are:
1. Quick process to information.
2. Better customer service.
3. Reduced paper work.
4. Increased productivity.
5. Improved tracing and expediting.
6. Cost efficiency.
7. Competitive advantage.
8. Improved billing.
– Though the use of EDI supply chain partners can overcome the distortions and
exaggeration in supply and demand information by improving technologies to
facilitate real time sharing of actual demand and supply information.
Bar coding and Scanner:
– Bar code scanners are most visible in the check out counter of super market. This
code specifies name of product and its manufacturer. Other applications are
tracking the moving items such as components in PC assembly operations,
automobiles in assembly plants.

22. Information and Technology -
Application of SCM
Data warehouse:
Data warehouse is a consolidated database maintained separately from an
organization's production system database. Many organizations have
multiple databases. A data warehouse is organized around informational
subjects rather than specific business processes. Data held in data
warehouses are time dependent, historical data may also be aggregated.
Enterprise Resource planning (ERP) tools:
Many companies now view ERP system (eg. Baan, SAP, People soft, etc.) as
the core of their IT infrastructure. ERP system have become enterprise
wide transaction processing tools which capture the data and reduce the
manual activities and task associated with processing financial, inventory
and customer order information. ERP system achieve a high level of
integration by utilizing a single data model, developing a common
understanding of what the shared data represents and establishing a set
of rules for accessing data.

23. Information and Technology -
Application of SCM
• Electronic Commerce:
– It is the term used to describe the wide range of tools
and techniques utilized to conduct business in a
paperless environment.
– Electronic commerce therefore includes electronic
data interchange, e-mail, electronic fund transfers,
electronic publishing, image processing, electronic
bulletin boards, shared databases and
magnetic/optical data capture.
– Companies are able to automate the process of
moving documents electronically between suppliers
and customers.

24. Agile supply chain

25. Content
The concept of agility1.
Agile practices2.

26. The concept of Agility
• Market sensitive
– Supply chain is capable of
reading and responding
to real demand
• Virtual
– Information-based supply
chain, rather than
inventory-based.
Agile supply chain

27. The concept of Agility
• Network based
– EDI and internet enable
partners in the supply chain
to act upon the real demand
• Process integration
– Collaborative working
between buyers and
suppliers, joint product
development, common
systems and shared
information
Agile supply chain

28. The concept of Agility
• Demand characteristics and supply capabilities
end-customers
become more
knowledgeable
about product
Lean supply chain
Agile supply chain
1980’s
1990’s
Efficiency, cost
Responsiveness
Focus

29. The concept of Agility
• Demand characteristics and supply capabilities
Distinguishing
attributes
Lean supply Agile supply
Typical products Commodities Fashion goods
Marketplace demand Predictable Volatile
Product variety Low High
Product life cycle Long Short
Customer drivers Cost Availability
Profit margin Low High
Dominant costs Physical costs Marketability costs
Stockout penalties Long-term contractual Immediate and volatile
Purchasing policy Buy materials Assign capacity
Information enrichment Highly desirable Obligatory
Forecasting mechanism Algorithmic(基于算法) Consultative(基于咨询)

30. The concept of Agility
Characteristic Lean Agile
Logistics focus Eliminate waste Customers and markets
Partnerships Long-term, stable Fluid clusters
Key measure
Output measure such as
productivity and cost
Measure capabilities,
and focus on customer
satisfaction
Process focus
Work standardization,
conformance to
standards
Focus on operator self-
management to
maximize autonomy
Logistics planning Stable, fixed period Instantaneous response
Comparison of characteristics of lean and agile supply

31. The concept of Agility
Source: Mason-Jones, Naylor and Towill (2000), Engineering the leagile
supply chain

32. The concept of Agility
Long lead time
Short lead time
Supply
characteristics
Demand
characteristicsPredictable
market
Unpredictable
markets
Plan and
control
JIT: pull
scheduling
React and
execute: agile
capabilities
Hold inventory: hedge
and deploy

33. Source: Martin, Christopher and Denis Towill, An integrated model for
the design of agile supply chains
• Application of leagility: the Pareto curve approach

34. • Application of leagility: the de-coupling point
approach

35. The concept of Agility
• Preconditions for successful agile practice
– Enterprise-level reality check
– Cost of complexity sanity check
– Lowering the cost of complexity: avoiding overly
expensive agility
– Forecasting: reduce the need for last minutes crises
• External: demand forecast
• Internal: financial forecast, asset forecast

36. Agile practices
• Key issue
1
How can we use agile practices
to benefit from turbulence in the
marketplace?

37. Agile practices
• Three characteristics of supply chain
operations related to agile
– Mastering and benefiting from variation in demand;
– Very fast response to market opportunities;
– Unique or low volume response.

38. Agile practices
• Benefiting from variance
– Three sources of demand uncertainty
• Seasonality
• Product life cycles
• End-customer demand
Demandvariance
Time

39. Agile practices
• Benefiting from variance
– Three sources of demand uncertainty
• Seasonality
• Product life cycles
• End-customer demand
variety
Volume
Start up Micro-markets
Organize Adjust
Agile capability is
needed

40. Agile practices
• Benefiting from short time windows
– Decreased D-time requires different levels of agility
(VMI & QR)
• Speed of replenishment
• Upstream time sensitivity
• Information dissemination and alignment

41. Agile practices
• Benefiting from small volume
– Small volume is a result of micro-markets,
customization and rapid responsiveness.
– Three approaches of agile strategy related to small
volume
• Changeover flexibility
• Modularity at the network level
• Service-based and information-based solutions

42. Agile practices
• Benefiting from small volume
Variety
decrease
Volume
decrease
Mass production
Flexibility
Modular supply network
Craft production

43. An integrated model for enabling the Agile supply chain

44. Reverse Supply Chain [RSC]
• Reverse supply chain or reverse logistics is the
series of activities required to retrieve a used
product from a customer and dispose of it
properly or reuse after processing .
• The chain connects end users with
manufacturer in reverse direction.

45. Hierarchy of RSC

46. Manufacturer Distributor Customer Collection
Third party
Recycling
Secondary
Market
Open loop - RSC

47. Closed Loop - RSC

48. Typical collection methods in Close Loop
[RSCM]

49. General Process In RSC

50. Product Recovery Strategy - RSC

51. Time value of product returns
• Marginal Value of Time (MVT)
– The loss in value per unit of time spent awaiting
completion of the recovery process
– MVT (%)= Decrease in value of product
Time
– Example: Time sensitive consumer electronics products such as PCs
can lose value at rates in excess of 1% per week, and the rate increases
as the product nears the end of its life cycle

52. Time value of product returns

54. * evaluation of products at retailer or reseller

55. RSCM decisions
• Efficient RSCM: A supply chain designed to
deliver product at low cost
– Best for Functional products
– Suitable for products with High MVT
• Responsive RSCM: A supply chain designed for
speed of response
– Best for Innovative products
– Suitable for products with Low MVT

56. Evolution of Different Strategies in RSC
Table 4 : LEE strategy based on FISHER Matrix ,2002

57. Evolution of Different Strategies in RSC

58. Decoupling Point [D.P]

59. Important managerial issues in RSCM-
Network Design
• Collection – Recovery channels its roles
• Inspection of returned products-location of
facilities
• Reverse Supply Chain Network Design Options
• Role of Forward Supply Chains
• Integration of FSC and RSC
• Role of 3PL
• Most of the reverse supply chain activities takes
place in downstream forward supply chain of lead
organisation.

60. GOME Electrical Appliance[china]

61. GOME Electrical Appliance[china]

62. GOME Electrical Appliance[china]

63. AGRO Supply Chain
• Agribusiness, supply chain management
(SCM) implies,
– Managing the relationships between the
businesses responsible for the efficient production
and supply of products from the farm level to the
consumers to meet consumers’ requirements
reliably in terms of right quantity, right quality
and right price.

66. Components of an Agro supply chain
Following are the components of an organised
agri- supply chain:
1. Procurement or sourcing
2. Logistic management
a. Transportation
b. Material management
c. On the premise of supplying mostly from
production not stock
d. Warehousing
e. Logistics Network modeling

67. Components of an Agri supply chain
3. Organizational management
a. Contracting
b. Strategic alliances and partnerships
c. Vertical integration
i. Long term storage
ii. Packaging technology
iii. Cold chain management
iv. Energy efficient transport
v. Quality and safety
4. Application of Efficient Consumer Response (ECR)
System
a. Electronic scanning of price and product at the point of
sale
b. Streamline the entire distribution chain

69. Coordinated AGRO supply chain
• In the last few years there has been an emergence of
more coordinated supply chains
for fruits and vegetables in India catering to the export
market and to the high end domestic market.
• Several companies in India are beginning to invest in
integrated supply chain management systems and
infrastructure with emphasis on quality and, to a lesser
extent, on safety.
• Initiatives are taken to establish more terminal
markets based on modern infrastructure.

70. Modern Terminal Market / MTM

71. Coordinated AGRO supply chains
• Supermarket procurement regimes for
sourcing of fruits, vegetables, dairy and meat
strongly influence the organization of the
supply chains.
• The rising scale of organized retail in the
Asian countries (like Metro Cash & Carry, Tata
Chemicals and Field Fresh Foods,Bharti
Enterprises, Reliance Fresh in India)

73. Companies involved in
Agro supply chain
• DCM Shriram Consolidated Ltd (DSCL) is in
the process of tying up with them to source
fruits and vegetables from farmers and supply
to the retail chains.
• DSCL is already doing this for Future Group's
Food Bazaar, south based Subhiksha and
RPG's Spencer.

74. Companies involved in
Agro supply chain
Mahagrapes
• One of the largest exporters of fresh Grapes
(mainly seedless grapes) from Maharastra India.
• Mahagrapes is a partnership firm of sixteen grape
growers cooperatives.
• It acts as
– facilitator,
– quality controller,
– input supplier as well as service provider to its
member societies.