Supply Chain Management

a) Bull Whip effect in Suppy Chain Management

Distorted information from one end of supply chain to other can lead to tremendous inefficiencies: excessive inventory
investment and poor inventory investment, poor customer service, lost revenues, misguided capacity plans, ineffective
transportation and missed production schedules. Term coined by P&G the effect is also known as whiplash effect
Increased Variability of orders up the supply chain is clear from the following figure:

The theme observed is:

Variability of orders on the upstream side is always more than that at the downstream side. Can be simulated in Beer
game.The solution is to improve supply chain infrastructure rather to influence the decision makers behavior.
Causes are :
1. Demand Forecast Updating
2. Order Batching
3. Price Fluctuation
4. Rationing And Shortage Gaming

Countering Bull-Whip Effect :

Simplest way to control Bull whip effect: Reduce frequency and level of wholesale price discounting
b) Supply Chain Management - Basic Structure

Three elements in conceptual framework of SCM :

Business Processes-activities that produce a specific output of value to the customer
Management Components-components by which business processes are structured and managed
Supply chain Network Structure-configuration of companies within supply chain

Hewitt identified 7 Business Processes :

1. Customer Relationship Management
2. Customer Service Management
3. Demand Management
4. Order Fulfillment
5. Manufacturing Flow Management
6. Procurement
7. Product Development and Commercialization

Management Components of the SCM :

Planning and Control
Work Structure
Organization Structure
Product Flow Facility Structure
Information Flow Facility Structure
Product Structure
Management Methods
Power and Leadership Structure
Risk and Reward Structure
Culture and Attitude

Members of the Supply Chain

Primary Members All those autonomous companies or Strategic business Units who actually perform operational
and/or managerial activities in the business processes designed to produce a specific output for a particular customer or
market
Supporting Members Companies that simply provide resources, knowledge, utilities or assets for the primary members
of the supply Chain

c) Logistics

d) Manufacturing Resource Planning (MRP - II)

It is a computer-based planning and scheduling system designed to improve management's control of manufacturing and its
support functions
MRPII evolved from Material Requirements Planning (MRP), a computerized tool for scheduling and ordering materials. MRP
is a technique for exploding bills of material to calculate net materials requirements and plan future production. Early MRP
systems used four pieces of information to determine what materials should be ordered and when: the master production
schedule, which describes when each product is scheduled to be manufactured; bills of material, which list exactly the parts or
materials required to make each product; production cycle times and materials needs at each stage of the production cycle; and
supplier lead times. The master schedule and bills of material indicate what materials should be ordered; the master schedule,
production cycle times and supplier lead times then jointly determine when orders should be placed. Over time, such features as
capacity planning, vendor scheduling, and work-in-process tracking were added to MRP systems, so that management could
also monitor operating performance