Presented By Arun T.

Ravindran MBA (IB)

A supply chain may be considered as a group of organizations, connected by a series of trading relationships. Each organization in the chain procures and then transforms materials into intermediate/final products, and distributes these to customers. The supply chain can be defined as the integral management of the companys various logistical stages such as materials procurement, production, storage, distribution and customer service.

The major difference seems to be that supply chain management is the preferred name for the actualization of integrated logistics.
The concept of integrated logistics consists of two interrelated efforts: Logistics operation: Logistic operation can be basically clubbed into physical distribution management, materials management and internal inventory transfer. Logistic coordination: Logistic coordination pertains to forecasting, order processing, operational planning and product procurement or MRP. This integration is effected through effective information flows.

Generation of requirements
Sourcing

Pricing
Post-award activities

Identifying the right and the best material

Development of specifications

Prepare statements of work that describe

these requirements.

Sourcing is a very important activity in supply chain management. The decision maker should have the clear idea about the following:
Budget: How much money can you spend on a system? Source: Which is the source available in the market for the budget you have? Availability: Is it readily available too? Services: In case it is available how its after sales services are? Final selection: What is the best that suits all the above?

Its a two way traffic aimed both at the supplier and the manufacturer. Its done in such a way that it benefits the supplier for its effort and also results in lowest cost for the firm who buys the supplies. Keeping in mind inflationary trends, pricing forms part of the on-going process in supply management with inbuilt negotiations, to arrive at the best deal possible.

Important phase which ensures that the firm receives what it demanded. It also ensures that the prices are in check and that quality is being maintained. This also includes supplier developments, criticalities management, technical assistance and management of the complete contract.

The various strategies that have to be followed for effective integration are:

Push Strategy
Pull Strategy Push-pull Strategy

Long-term forecasts are the backbone of a push-based supply chain model

Inability to meet changing demand patterns.
The obsolescence of supply chain inventory as demand for certain products disappears.

In this type of supply chain the production and distribution is based on demands so that it can be effectively coordinated with true customer requirements rather than forecasts.
A lesser lead-time, since better anticipation is made on customer demands and the retailers Lesser inventory with the retailers A decrease in variability due to reduction in leadtime Decreased inventory with manufacturer due to reduction in variability.

This is an ideal mix of both push and pulls strategy in which the first half of the system is based on push method and the remaining half as pull based.

Managing capacity
Time flexibility from workforce Use of seasonal workforce Use of subcontracting Use of dual facilities dedicated and flexible Designing product flexibility into production processes

Managing inventory
Using common components across multiple products Building inventory of high demand or predictable demand products

It seeks to estimate, control, smooth, coordinate, balance and influence the demand and supply for a firms products and services in an effort to reduce total costs for the firm and its supply chain. It accepts forecast from other functions and updates these based on real time demand. It is also directly related to supply in order to adjust the flow of raw materials and services.

Control in demand management is established by:

Execution of effective production schedule Calculation of inventory levels Capabilities and capacity Developing of customer service strategies

It is also responsible for smoothing and streamlining production after the master production schedule is in place and been released to internal production and external suppliers. Demand keeps on changing on a day-to-day basis. Therefore the demand managers should have contingencies in place in coordination with the supply chain members so that necessary modifications could be affected well in time.

Demand forecast: A process in which historical demand data are used to develop long-term estimates of expected demand, that is, forecast. Demand shaping: It is a process in which the firm determines the impact of various marketing plans such as promotions, pricing discounts, rebates, new product introduction and product withdrawal on demand forecasts. Select the push-pull boundary so that demand is aggregated over one or more of the following dimensions:
Demand is aggregated across products Demand is aggregated across geography Demand is aggregated across time

Promotion Pricing Timing of promotion and pricing changes is important Demand increases can result from a combination of three factors:
Market growth (increased sales, increased market size) Stealing share (increased sales, same market size) Forward buying (same sales, same market size)

Use market research, demographic and economic trends to improve forecast accuracy Incorporate collaborative planning and forecasting processes with the customers for better understanding of demands. Determining the optimal assortment of products by store so as to reduce the number of Stock keeping units competing in the same market.

An iterative process must be used to identify the following:

The best way to allocate marketing budgets and supply and distribution resources The impact of deviation from forecast demand The impact of changes in supply chain leadtimes The impact of competitors promotional activities on demand and supply chain strategies

Aggregate planning is the process of developing, analyzing, and maintaining a preliminary, approximate schedule of the overall operations of an organization. The aggregate plan generally contains targeted sales forecasts, production levels, inventory levels, and customer backlogs. Aggregate planning is considered to be intermediate-term in nature.

There are two pure planning available to the aggregate planner:

strategies

Level strategy Chase strategy

A level strategy seeks to produce an aggregate plan that maintains a steady production rate and/or a steady employment level. In order to satisfy changes in customer demand, the firm must raise or lower inventory levels in anticipation of increased or decreased levels of forecast demand. A second alternative would be to use a backlog or backorder. A level strategy allows a firm to maintain a constant level of output and still meet demand.

A chase strategy implies matching demand and capacity period by period. This could result in a considerable amount of hiring, firing or laying off of employees; insecure and unhappy employees; increased inventory carrying costs; problems with labor unions; and erratic utilization of plant and equipment. The major advantage of a chase strategy is that it allows inventory to be held to the lowest level possible, and for some firms this is a considerable savings.