Supply-Chain Management

The objective is to build a chain of

suppliers that focuses on
maximizing value to the ultimate
customer

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The Supply Chains

Strategic Importance
Supply chain management is the
integration of the activities that
procure materials and services,
transform them into intermediate
goods and final products, and deliver
them through a distribution system

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Creating the logistic vision

The pupose of making logistic vision
statement is to give a clear indication of the
basis whereby a business tends to build a
position of advantage through close
customer relationships
Making service happen is the ultimate
challenge
How to create value to the customers via
logistics and scm
A logistic vision should provide a roadmap
for how better,faster and cheaper are to be
achieved.
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Problems with conventional

organization
1.

Inventories build up at functional boundaries:if individual

functions are encouraged to optimize their own costs of the
budgeting system then this will often be at the expense of
increased inventory across the system as a whole

2.

Pipeline costs are not transparent:conventional organization

will normally only identify costs on a functional basis.It is a
poblem bacause the costing systems are designed to monito
functional or input costs rather than flow or output costs

3.

Functional boundaries impede process management:the ideal

way to manage a logistic process is as a complete system not
by fragmenting it.to achieve a smooth flowing logistics pipeline
requires an orientation that facilitates end to end process
management

4.

Conventional organization present many faces to the customer

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Developing the logistic

organization
Creating a higher level of authority in the
form of a logistic function that links together
purchasing,production and distribution
tasks.
Converting conventional vertical
organization to horizontal or market facing
business
Impoving the customer order management
1.Eliminate the non value added activities
2.Order fulfilment groups
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Logistic as a value for

change
As markets technologies and competitive
forces change at ever increasing rates the
imperative for organizational change
becomes more pressing.
the driving force for the organizational
change is logistics.
Shift from a functional focus to process
focus

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The need for integation

Process integration both upstream and downstream, the
collabaration between buyers and suppliers, joint poduct
development, common systems and shared information
1.Supply chain rationalization(decrease in no. of suppliers and
components but increase in system)
2.Supplier development program(cross functional team will
work closely with suppliers to seek improvements)
3.Early supplier involvement in design(cost effective designs
can be created)
4.Integrated information systems(no orders,no delivery
notes.only single information)
5.Centralization of inventory( the dealers will have only demo
models and the orders will be fulfilled later on from the
centralized system
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Managing the supply chain

as a network
1. Collective strategy
development(network members must
collectively agree strategic goals for
the network and the means of
attaining them)
2. Win win thinking(all partners should
benefit and be better off as a result of
cooperation)
3. Open communication(transparency by
which cost data is shared upstream

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Co-makership and logistics partnerships

The development of long term relationship with a limited no.
of suppliers on the basis of mutual confidence
Benefits:
1. Shorter delivery lead times
2. Reliable delivery promises
3. Less schedule disruption
4. Lower stock levels
5. Faster implementation of design change
6. Fewer quality problems
7. Stable competitive prices
8. Orders given higher priority
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Supply Chain Management

Important activities include determining
1. Transportation vendors
2. Credit and cash transfers
3. Suppliers
4. Distributors
5. Accounts payable and receivable
6. Warehousing and inventory
7. Order fulfillment
8. Sharing customer, forecasting, and
production information
2011 Pearson Education, Inc. publishing as Prentice Hall

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