GICED Basics of Supply Chain Management.pptx

GICED Basics of Supply Chain Management.pptx

1. Logistics and Supply Chain Management By Mansing Kisan Uthale B.E,MBA,DSLFF,Phd(Pursuing)

2. LOGISTICS MANAGEMENT

3. Logistics Management In all facets of our lives, goods and services are transported from the place they are produced to the place they are consumed. This exchange process is the cornerstone of all economic activity. In the case where there are many exchanges taken place between producers and consumers , the firms which are involved in bringing the products or services to the market are aligned in a network called supply chain.

4. Why do we have to move materials? Let us try to answer this question by analysing a Restaurant/ Chop bar. What foods do you find on the menu? How are they produced or prepared? What ingredients go into the preparation? Where are they sourced from?

5. Why do we have to move materials? Imagine how many tangible and intangible goods have been moved in this case. All organisations have to move materials for even the smallest of their processes. Manufacturers have to procure raw materials from suppliers and distribute finished products to the customers The function that is responsible for controlling such movement is termed ‘logistics ’

6. DEFINITIONS OF LOGISTICS MANAGEMENT? The Council of Supply Chain Management Professionals (CSCMP), one of the leading professional organizations for logistics personnel, and formerly known as the Council of Logistics Management [CLM), defines logistics management as: ‘that part of Supply Chain Management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, human resource and related information between the point of origin and the point of consumption in order to meet customers' requirements‘ This definition includes the flow of materials and services in both the manufacturing and service sectors.

7. DEFINITIONS CONTINUED? Logistics is not confined to manufacturing operations alone. It also includes the service sector with entities such as the Government, Banks, Telecommunications, Hospitals, Educational institutions, Retailers and the Hospitality industry. Logistics describes the entire process of materials and products moving into, through and out of firms. Inbound Logistics covers the movement of material received from suppliers. Materials management describes the movement of materials and components within a firm. Physical Distribution (PD) refers to the movement of goods outward from the end of the assembly line to the customer.

8. THE LOGISTICS PIPELINE Transport Operator Supplier Manufacture 3 rd Party Distributor Retailer Customers

9. THE LOGISTICS FUNCTIONS The activities of Logistics are: Customer service Order processing Packaging Demand Forecasting Reverse logistics Materials Handling Logistics Strategic planning Logistics communication Purchasing/procurement Inventory control Transportation Warehousing Service support

10. ELEMENTS OF LOGISTICS The component parts of logistics are: 1. Sourcing and Procurement 2. Manufacturing/Service package 3. Distribution 4. Storage and Warehousing 5. Information systems and management 6. Customer service

11. THE LOGISTICS FUNCTIONS

12. THE LOGISTICS FUNCTIONS Costs: it reduces costs of attaining logistics aims. Transportation: the transportation includes various methods for transporting goods like trucks i.e. roadways, railways, waterways and airways and also through the system of a pipeline. Selecting the mode of transportation to depend on the factors like: Speed, Cos, Dependability, Availability, Capability Inventory: this function works on the order of products or goods like when to order, quantity to order and just-in-time factor. Warehousing: warehousing is about the storage and distribution, they differ in terms of following parameters: The type of facility availed Material value An ability to perish Order processing: this function is about shipping the products which are ordered and also delivering those.

13. ELEMENTS OF LOGISTICS CONT. 1. Customer Service A service a firm provides to those who purchase its products or services. It’s a feature of the amplified product that adds value for the buyer. 2. Logistics communication/Information System Information is needed for both long-range and day-to-day decision making. Information provides organisations with insight and visibility into the supply chain activities taking place from the distant supplier to customer locations. This information must effectively flow within the orga­nization and between key participants/ stakeholders

14. ELEMENTS OF LOGISTICS CONT. IT systems in logistics provide support in: Order pr o cessing

15. ELEMENTS OF LOGISTICS CONT. IT systems in logistics provide support in: Warehousing management systems Fleet management systems Routing and Scheduling On-vehicle systems Payment systems Inventory systems

16. ELEMENTS OF LOGISTICS CONT. 3. Procurement/Purchasing Procurement: It’s the acquisition of goods and/or services at the best possible total cost of ownership, in the: Right product Right quantity Right condition Right place Right customer Right time Right price for the direct benefit or use of corporations. (7 R’s)

17. ELEMENTS OF LOGISTICS CONT. 3. Procurement/Purchasing Purchasing: It’s the process of ordering and receiving goods. It is a subset of the Procurement process. Generally, purchasing refers to the process involved in ordering goods such as request, approval, creation of a purchase order record (a Purchase Order(P.O.), etc.

18. ELEMENTS OF LOGISTICS CONT. 4. Inventory Control Inventory/Stock is a quantity or store of goods that is held for some intended purpose or use. Inventory may be kept "in-house," meaning on the premises or nearby for immediate use; or it may be held in a distant warehouse or distribution centre for future use.

19. ELEMENTS OF LOGISTICS CONT. 5. Transportation Transport or transportation is the movement of people and goods from one location to another. Modes of transport include; Air, LAND: Rail, Road, Water, Cable, Pipeline and Inland Waterways The field can be divided into infrastructure, vehicles and operations.

20. ELEMENTS OF LOGISTICS CONT. 6. Warehousing: Warehousing is that part of a firm's logistics system that stores products (raw materials, parts, goods-in-process, finished goods) at and between point of origin and point of consumption Provides information to management on the status, condition and disposition of items being stored The term Distribution Centre (DC) is sometimes used.

21. ELEMENTS OF LOGISTICS CONT. 6. Warehousing

22. ELEMENTS OF LOGISTICS CONT. 6. Warehousing

23. ELEMENTS OF LOGISTICS CONT. 7. Order Processing: Order processing is the term generally used to describe the process or the work flow associated with the picking, packing and delivery of the packed item(s) to a shipping carrier.

24. ELEMENTS OF LOGISTICS CONT. 8. Packaging Packaging is the Science, Art, and Technology of enclosing or protecting products for distribution, storage, sale and use. Packaging can be described as a coordinated system of preparing goods for transport, warehousing, sales and end use.

25. ELEMENTS OF LOGISTICS CONT. 8. Packaging cont’d… Packaging contains, protects, preserves, transports, informs, and sells. Packaging Objectives: Protection (Physical, barrier,) Containment or agglomeration Information transmission Marketing Security, etc .

26. ELEMENTS OF LOGISTICS CONT. 8. Packaging cont’d…

27. ELEMENTS OF LOGISTICS CONT. 8. Packaging cont’d…

28. ELEMENTS OF LOGISTICS CONT. 8. Packaging cont’d…

29. ELEMENTS OF LOGISTICS CONT. 9. Demand Forecasting Activity of estimating the quantity of a product or service that consumers will purchase at specific times. Demand forecasting may be used in making pricing decisions, in assessing future capacity requirements, or in making decisions on whether to enter a new market

30. ELEMENTS OF LOGISTICS CONT. 10. Reverse logistics It is the process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal.

31. ELEMENTS OF LOGISTICS CONT. 11. Materials Handling Handling and storing materials involve diverse operations such as hoisting tons of steel/rice/sugar with a crane; driving a truck loaded with same; carrying bags or materials manually; and stacking palletized bricks or other materials such as drums, barrels, lumber, etc Improper handling and storing of materials often result in costly spoilage and injuries

32. ELEMENTS OF LOGISTICS CONT. 12. Logistics Strategic Planning The challenge for logistics managers nowadays is to constantly balance a need to perform well while responding to a constantly changing environment. Logistics managers must proactively and strategically plan for the future and therefore prepare for these changes.

33. ELEMENTS OF LOGISTICS CONT. 13. Service Support Parts and service support, or after-sale service support, provides repairs, spares and parts to dealers/customers and ensures the collection of defective or malfunctioning products from customers, and responding quickly to demands for repairs or assistance.

34. ELEMENTS OF LOGISTICS CONT. 13. Service Support Parts and service support, or after-sale service support, provides repairs, spares and parts to dealers/customers and ensures the collection of defective or malfunctioning products from customers, and responding quickly to demands for repairs or assistance.

35. 7 PRINCIPLES OF LOGISTICS The Chartered Institute of Logistics & Transport UK (2019) defines them as: Getting the Right product, in the Right quantity, in the Right condition, at the Right place, at the Right time, to the Right customer, at the Right price . .

36. 6 TYPES OF LOGISTICS Inbound Logistics. ... Outbound Logistics. ... Reverse Logistics. ... Procurement logistics. ... Manufacturing logistics. ... Distribution logistics

37. LOGISTICS FRAMEWORK Logistics management is an integrating function which coordinates and optimises. all logistics activities, as well as integrates them with other functions, including. marketing, sales, manufacturing, finance, and information technology.

38. INDIA LOGISTICS SECTOR India ranked 38 out of 139 countries globally based on the Logistics Performance Index, India's logistics industry is expected to reach USD 330 billion by 2025 as per industry estimates. With a massive growth potential, the sector plays a critical role in the development of industries, infrastructure, and economy at large. The logistics cost in India is 13% to the GDP as compared eight per cent in the rest of the world, making it difficult for Indian exports to compete globally, "We will have to remove the 8% and 13% gap. We have formulated a framework for the next five years. There are 48,000 logistics companies in India and employees 2 Billion peoples direct and indirectly. In the year 2022, the size of the Indian logistics market was around 274 billion U.S. dollar. It was estimated that this market would grow to 563 billion dollars in 2030, at a compound annual growth rate 9.4 percent  

39. GLOBAL LOGISTICS SECTOR   Logistics is a $4.3 trillion industry globally 8,70,000 logistics companies in the world Germany again leads the table as #1 with an LPI score of 4.20. Followed by Sweden, Belgium, Austria and Japan in that order of top 5 Nations. The LPI scores of high-income countries are 48% higher than in lower-income countries Singapore is the world's busiest transhipment logistic hub that is well-connected to 600 ports in over 120 countries. It has also consistently topped the Leading Maritime Capitals of the World report.

40. DIFFERENCE BETWEEN LOGISTICS AND SCM   Logistics focus on the efficient and cost-effective delivery of goods to the customer. Supply chain management controls the development of raw materials into finished goods that move from the supplier to producer to warehouse to retailers and/or consumers along with information.

41. 3PL AND 4PL IN LOGISTICS   1)3PL (third-party logistics) provider manages all aspects of fulfilment, from warehousing to shipping. 3PL – A logistics provider, hired by the manufacturer, who manages carriers, as well as delivers services like fulfilment, warehousing, and other logistics. 3PL logistics services include: warehousing, inventory management, shipping, receiving, FTL and LTL freight, picking and packing, kitting, and reverse logistics (returns). 3PL providers are more suitable for small-to-medium businesses. Example: DHL, FedEx, CEVA,

42. 3PL AND 4PL IN LOGISTICS CONT…….   2)4PL (fourth-party logistics) provider manages a 3PL on behalf of the customer and other aspects of the supply chain. 4PL providers are better for medium-to-large businesses ,4PL providers function at the optimization and integration level. 4PL – A provider that manages not just the logistics, but the entire supply chain. Amazon: As one of the world's largest e-commerce platforms, it is one of the most well known examples of 4PL. Amazon offers a comprehensive 4PL solution, including warehousing, transportation, and inventory management, all under one umbrella.

43. 3PL AND 4PL IN LOGISTICS CONT…….  

44. 3PL AND 4PL IN LOGISTICS CONT…….  

45. INBOUND AND OUTBOUND LOGISTICS

46. INBOUND LOGISTICS CONT…. Inbound Logistics Example: Let’s go through a step-by-step example of an inbound logistics process: The business chooses suppliers, negotiates the prices, and purchases raw materials. It makes the payment and receives a receipt from the supplier. The supplier ships the order, sends an automatic notification to the business, together with tracking information. The order arrives at the proper facility. The staff unload the order and verify the condition and the number of goods so they could confirm acceptance. Finally, the goods are moved to the materials storage facility or the warehouse, depending on their future use.

47. OUTBOUND LOGISTICS CONT…. Outbound Logistics Example: Here is a step-by-step outbound logistics example from an e-commerce business: The customer chooses a product and places an order on the company’s website. The warehouse confirms the order and the staff does the picking. The warehouse staff now packs the items and prepares the order for shipping. Freight trucks pick up the orders and drop them off at the proper distribution centre. Delivery drivers pick up orders that belong to their area. The order is delivered to the consumer’s address.

48. Supply Chain Management A supply chain consists of all the activities and entities that are involved in extracting, processing, manufacturing, distributing and selling the products to the ultimate customers. However, the concept of SCM is much broader than that of the marketing channels as SCM goes back to a distant starting point / root and includes the raw material suppliers.

49. Supply Chain Management “Supply chain management is the integration of businesses from end user through original suppliers that provides products, services, and information that add value for customers.” “A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers.” Supply chain management is the combination of art and science that goes into improving the way your company finds the raw components it needs to make a product or service, manufactures that product or service and delivers it to customers.

50. Supply Chain Management SCM represents the processes and technical systems that enable multiple organizations to collaboratively design, build and deliver products (though not necessarily services). Integrated supply chain management is a process-orientated, integrated approach to procuring, producing, and delivering products and services to customers. SCM has a broad scope that includes sub-suppliers, suppliers, internal operations, trade customers, retail customers, and end users. It covers the management of material, information, and funds flows. It is a cradle-to-grave approach. SCM has grown over the past two decades from fragmented and un-automated processes to complex, integrated, and highly automated systems.

51. Scope of Supply Chain Management Supply Chain Management includes, planning, design, control and implementation of all business processes related to procurement, manufacturing, distribution and sales order fulfilment functions of a business. Thus Supply Chain Management includes managing supply and demand, sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels, and delivery to the customer. Due to its wide scope, supply chain management must address complex interdependences, in effect creating an “extended enterprise” that reaches far beyond the factory doors. All these activities involve multiple networks of vendors and service providers. These networks of suppliers and service providers have to be integrated and coordinated by the supply chain management experts in such a way that the raw material moves smoothly from various procurement points to the centres of production and the finished goods move smoothly from the centres of production to the various points of sale/ delivery to consumer, across the globe.

52. Scope of Supply Chain Management… Logistics is the back bone on which the supply chains are driven. Logistics refers to the management of flow of goods and supplies involving information, data and documentation between two entities or points. Logistics plays an important role in the post procurement function of delivery of raw material and supplies from the supplier to the factory or production center and the dispatch of finished goods from the factory to the point of delivery to the customer. When goods move from supplier to factory to point of sale they flow through a network of transportation by road, rail, ship or air. They may be stored in warehouses before being moved to forward locations. This entire activity involves various suppliers, agents and agencies including freight forwarders, packers, customs department, distributors and Logistics service providers etc. Logistics therefore is an integral component of Supply Chain Management.Though logistics and supply chain are intricately linked, both do not mean the same. Logistics is a sub component and extension of supply chain.

53. Importance of Supply Chain Management It is said that, today, the supply chain management system is the back-bone of a business organisation. This statement itself shows how important a component of business, is the supply chain and its management. Whenever a product is introduced and advertised in the market, a demand for the product is created. It is at this point that the consumer enquires about the product in various available retail/wholesale outlets.   At this point it is very essential that the entire market in the country and all the sales counters have the product, where the customer is able to buy and take delivery. If for any reason the product is not available at the right place and the right time, it can result in a drop in the customer’s interest and customer demand. This can have a disastrous effect on the success of the product.

54. Importance of Supply Chain Management Cont….. Thus a proper Transportation network design and management is of great importance, as a support to the sales and marketing strategy. In fact it can be said that without proper transportation network design and management, there is no way that the sales and marketing strategy can succeed. Thus it is an effective supply chain management that will ensure an effective Market Coverage and the availability of the right product at the right places across various locations in the country. Another reason why supply chain management is important is because inventory control and inventory visibility are the two critical elements in any business operation. Inventory control and visibility have a direct impact on the cost of production and hence a direct impact on the profitability of the organisation. The lesser the capital locked up in inventory the more will be the profitability and vice versa.

55. Importance of Supply Chain Management Cont… However visibility of inventory is also a factor that has to be considered. The two have to be balanced and the right or optimum inventory turnaround has to be established. Every company has a standard for inventory turnaround that is ideal or optimum for the particular business. Inventory turnaround is the number of times the inventory is sold and replaced during a particular period. This period is usually twelve months. Today inventory or stock of finished goods is held at many distribution centers, wholesale and retail locations across the country. These may or may not be managed by the organisation itself. Some could be managed by third parties. Inventory could also be in the pipeline in transportation. Any loss of inventory anywhere in the supply chain will result in a loss. As such the effective control of inventory is an important factor of the supply chain management function.

56. Objectives of Supply Chain Management “The goal of logistics and supply chain management is timely delivery, competitive pricing, mobility, and flexibility, together with innovative transportation services”. The basic objective of supply chain management is to ensure minimum cost and maximum efficiency in every aspect of handling of raw material, component parts and finished goods as they move from production centre to the final consumer. SCM works on the five basic components: Plan – Source – Make – Deliver – Return

57. Basic Components of Supply Chain Management 1. Demand planning and forecasting 2. Demand collaboration, i.e., collaborative resolution process to determine consensus forecasts. 3. Order promising, i.e., when can one promise a product to a customer taking account lead times and constraints. 4. Strategic network optimization, i.e., what plants and distribution channels should serve, what markets for what products whether monthly — yearly. 5. Production and distribution planning, i.e., coordinate the actual production and distribution plans for a whole enterprise may be on a daily basis. 6. Production scheduling. 7. Plan of reduction of costs and management of the performance, i.e., diagnosis of the potential and the indicators, the organization, evaluation and accounting reporting, evaluation and reporting quality, etc.

58. Role of Freight Forwarding in Supply Chain Management A freight forwarding company acts as an intermediary between clients and transport agencies to enable the goods intended to be shipped to reach its final destination. The global market for freight forwarding services grew by 2.7% in real terms in 2016. All the key logistic players today were traditionally freight forwarders who later diversified into other logistic segments over time. In Supply Chain Management, freight forwarders play a significant interlinking role as follows: 1. Global Transportation Network: Freight forwarders are considered as hubs of information owing to their expertise in international logistical processes which is mainly built on a social network of cross-border colleagues and contacts. They are well versed in the law of various regions as well as inter cultural differences and with their knowledge, can help businesses take advantage of the same.

59. Role of Freight Forwarding in Supply Chain Management 2. Integration of Operations Freight forwarders unify the different verticals of supply chain management by conveying the correct information at the right time and to the right recipient, initiating and facilitating the movement of goods. 3. Consultant/Advisory Services A business can rely on a freight forwarder to seek advice on competitive situations, export strategies, trader terms to be included in foreign trade contracts, consumer needs and so on. With every passing day, more and more logistic chains are evolving into multimodal and cross-border systems and businesses can no longer do without a service provider who can manage the complexities involved

60. Role of Freight Forwarding in Supply Chain Management 4. Cost Effective: Transportation is the largest component in the logistic cost structure of a business and cost effective freight forwarding agents can help achieve a point of competitive differentiation. With their established global network, they facilitate import/export by providing standard services at economical prices. With the advent of freight forwarders, transportation is no more the cost-albatross in supply chain management . 5. Legal Assistance: All the necessary documents and certifications are prepared by a freight forwarder, who handles all the legal procedures and hence expediting the entire flow of goods from the shipper to the destination. Procedural and documentary compliances are taken care of by them thus ensuring hurdle less global trade activities by a business.

61. Role of Freight Forwarding in Supply Chain Management 4. Cost Effective: Transportation is the largest component in the logistic cost structure of a business and cost effective freight forwarding agents can help achieve a point of competitive differentiation. With their established global network, they facilitate import/export by providing standard services at economical prices. With the advent of freight forwarders, transportation is no more the cost-albatross in supply chain management . 5. Legal Assistance: All the necessary documents and certifications are prepared by a freight forwarder, who handles all the legal procedures and hence expediting the entire flow of goods from the shipper to the destination. Procedural and documentary compliances are taken care of by them thus ensuring hurdle less global trade activities by a business.

62. Components of Supply Chain Management

63. Components of Supply Chain Management Cont …. The success of any business relates to the effective management of operations. Usually, the lack of communication is the primary reason behind on-time delivery problems and stockouts. Therefore, every successful company needs a centralized system for effective communication known as supply chain management. This process, at times, can be trickier and challenging to implement. To better understand this process, I have split it into seven parts. Let’s take a brief introduction to all of them one by one.

64. Components of Supply Chain Management Cont …. 1.Planning: Every organization needs to manage the resources they have to get the optimal level of benefit from them. The planning process helps to determine the customer demand and the supply sources required for fulfilling the request. Supply chain managers are required to organize the sources of supply on a timely manner and make them available to start the production to ensure the supply is available. On-time supply is vital to ensure customer confidence. It is also essential to improve relationships with vendors. In the planning process, multiple departments work together to provide a supplier forecast.

65. Components of Supply Chain Management Cont …. 2.Procurement Some people take procurement and sourcing in the same context, but there is a difference between these terms. Sourcing is one part of the procurement process, and the entire process makes the supply chain management successful. Procurement is a process to acquire all the material used to complete the product’s production process. It includes everything used in the manufacturing process, from raw material to packing material. This process starts with forecasting and purchase planning in order to get quotations, price negotiations, order placement, order confirmation, and follow-up until the goods reach the company premises. After receiving goods, the suppliers receive their payments based on agreed upon payment terms. Sourcing:Generally, the sourcing process takes place before the procurement department purchases goods. The primary purpose of sourcing is to find reliable and quality suppliers capable of supplying goods as per demand levels.

66. Components of Supply Chain Management Cont …. 3.Production Planning Production planning is making the plan to get the maximum output from the available resources. The primary purpose of production planning is to deliver the product within the time limitations. Also, it helps to keep the quality of the product as per standard process. Usually, organizations have to manufacture multiple products on the same plant and supply various customers. Therefore, it is essential to prioritize production as per the time limit and capacity of production. Adequate resource allocation for every production line is vital to ensure quality standards. In production planning, sales and production departments collaborate by keeping in view the past data and expected sales volume based on forecasts.

67. Components of Supply Chain Management Cont …. 4.Inventory Management: Inventory management is the most crucial section of supply chain management and my personal favorite! In this section, we will discuss inventory from raw material and finished goods including Work in Process (WIP) Managing inventory allows organizations to find the optimal volume of raw materials required to satisfy future orders. The shortage of raw materials can cause delivery delays, leaving a wrong impression on customers. It is also essential to maintain the optimum level for finished products to handle the expected orders. Furthermore, effective inventory management helps to avoid the risk of excessive stock levels and overage inventory long-term.

68. Components of Supply Chain Management Cont …. 5.Warehousing: The warehouse is where they store goods for different purposes. These goods could be in the shape of raw material, finished product, or semi-finished product. However, the primary purpose of a warehouse is to reduce transportation cost. For example, every organization needs a warehouse to store its products, and sometimes they need multiple warehouses. Managing warehouses at different locations reduces the overall costs of delivering products to customers for that area. Warehouses can keep the goods for a long time to benefit from increased prices. Companies also save the raw material to use in days of shortage.

69. Components of Supply Chain Management Cont …. 6.Logistics: Logistics is the procedure of moving items from one place to another. It involves both raw materials and finished products. The logistics department delivers the products to customers as per the schedule and handles the shifting of finished products to warehouses at different locations. Usually, the logistic department also generates invoices for customers, receive payments, and serves the returning products. This department works with a fleet of vehicles for shipping purposes. Many large organizations hire logistic service providers to handle this department, especially when there is sensitive handling involvement. They are known as 3PL (third party logistics providers).