Introduction to Supply Chain Management

Good afternoon friends, we are going to start our discussions on a very important topic for today's managers, which is

supply

chain

analysis. Supply

chain

analysis is a combination of data analysis in

supply

chain

management

. supply chain

management

we all know is one of the most important aspect of business today we know some of the popular names of Fortune 500 companies like Walmart Dell and similarly 7-eleven etc from Japan Alibaba from These Chinese companies are known for their supply chain competence and today it is believed that supply chain is an area of ​​the organization that can provide many competitive advantages to a particular organization.

If you visit the Harvard Publishing website, you will find maximum cases in the area of ​​supply chain management and I particularly come from the operations management domain and now many of us all feel that supply chain management, which once was considered a subset of operations management, today the situation has almost been reversed: supply chain has become a general term and operations management has become a subset of supply chain management , so course on supply chain management and use of data analysis technique in supply chain management, so that name becomes supply chain analysis in the first lecture we will have some kind of

introduction

to the supply chain, the evolution of the supply chain over the last hundred years, so what are they? the different important decision phases in the supply chain, there are different ways in which we can study the supply chain, those views of the process we will see in our discussion in the first two lectures, which are the introductory lectures of this course, then also We will see what the importance is. of various types of flows in the supply chain, we will also look at some very important examples that make supply chains so popular and then we will also look at the strategic aspect of supply chain management and then we will see how we can achieve that fit strategic with respect to supply chain management and the competitive strategy of the organization, so in the first two lectures we will have a broad overview of this topic and we will see how supply chain management has become the use of data analytics and, in particular, the current shape of the supply chain. management where most of the decisions we make with the help of real-time data, so let's start with understanding what supply chain is.

Now supply chain has become such a common term that we find so many mentions of this term in media reports. We find the mention of this term in parliamentary debates, we also find the mention of this term in everyday discussions, many times we can wonder if it is an academic term or it is more of a media and reporting term, but now we are going through a formal supply chain management course and therefore it will be very relevant for us to understand the real meaning of supply chain and what it means and what are the meanings of supply chain management now that we can see that The supply chain involves all stages in meeting customer requirements and these stages may include factors: suppliers, transporters, warehouses, retailers and the customer himself.

It is very important to understand it all the time and I will emphasize throughout this course that the client is a very important person. integral part of the supply chain all the time, please, we must ensure that the customer is always kept in mind whenever we make a decision related to the supply chain, whenever we talk about the supply chain, so The customer is always an integral part of the supply chain many times. I feel that the retainer is our supply chain and the customer is not a part of the supply chain, but from now on once we are doing this formal course, remember that the customer is always a very integral part of the supply chain. supply, the role of supply chain is the integration of demand and supply this is very important demand comes from the customer side and supply comes from all these people manufacturers suppliers transporters warehouses retailers all help us meet customer demand, so the proper integration of demand and supply is very necessary for customer satisfaction as well as for the profitability of the service providers, so the importance of this issue is acquiring more and more in the upcoming competitive times and Within each company, within each company, the supply chain includes all functions that involve product development, marketing operations, distribution, finance, customer service. after-sales services, etc., many of us may feel that supply chain is more related to operations management, but if we talk in a very holistic way today it is no longer a specific concept of operations, but rather a more holistic concept and we require an equitable share of the product. development the participation of marketing the participation of distribution the participation of financial and after-sales services in achieving the objectives of supply chain management because, as I say, it is an integration of demand and supply, for what the demand side information, the demand side data, is typically captured by the marketing people and, based on that data, they report to the product development team, to the operations team, they develop new products, they ensure the supply of those products to customers and then, wherever the customer guarantees the supply up to that same point.

That same place is the responsibility of the distribution team, so it is very important that the scope of supply chain management is understood from a broader perspective and is not limited to the sky of operations, which is why we will see in our next discussion that supply chain management has the three verticals of decision making, it is dealt with at strategic level, it is also dealt with at tactical level, it is also dealt with at execution level, also due to the involvement of almost all functions, It's very similar when we talk about marketing integration when we talk about total quality management or when we get to this kind of supply chain management we talk about participation of all functions, so this holistic city is very, very important in the concepts modern management practices and that's what we're trying to emphasize, as I mentioned. that customer is a very integral part of the supply chain and the supply chain includes the movement of products from the suppliers who are here on the left side of the supply chain to the manufacturer and the distributor and also includes the movement of ferns of information and products both in the In this direction we will see these things in a better graphic way in the next slides, with increasing competition.

Nowadays it is more appropriate to say that the supply chain is changing into the form of a supply network or a supply wave because when we talk about a chain, it is linear like that, but in reality it is no longer a linear system. You have many important players in each of these locations and there can be crossover in each of these stations and therefore it is more appropriate to say that the supply chain is now becoming a supply network. or supply wave, let's see these are some of the generic types of supply chains where you can see that in a very conventional type of normal supply chain that we all know, there is a manufacturer that produces the goods that these goods reach the wholesaler. distribute to a large number of retailers in the market and those products reach the customer.

This is a very conventional type of supply chain and we all have used this type of supply chain but today you can also see and understand that there are chains where there are no wholesalers, there are big retail stores like Big Bazaar, like Reliance chains like Walmart, there are probably no wholesalers and the manufacturer directly supplies these products through the warehouse and the retailer, those big retailers directly supply these products to the customers. and then there are supply chains where the manufacturer distributes products directly to the customer, for example, BHEL. Take the example of BHEL. BHEL is the manufacturer and the customers are the State Electricity Board, so if DHL is manufacturing a turbine, there is no wholesaler or retailer in between. and in that supply chain, BHEL directly distributes those products to the customers and clients, so depending on your product to product, depending on the nature, unit cost and many other factors, you can have a variety of supply chain , these are some of the generic type of supply chain and the suitability of this supply chain depends on the type of products, the type of customers, the type of intermediaries that you need, but as I told you, these are very linear agreements, these three that I have shown here are very linear. of arrangements, but actually it is not like that, actually the situation is like this, where you have one manufacturer, but there are many wholesalers, many retailers are there and these wholesalers and retailers are creating a kind of network situation, so they are chains , but what I have drawn on the board is this. it is more like a network so it is a supply chain network so in today's environment we say that supply chain network is more appropriate than just a supply chain and one more thing I would like to emphasize when principle is that today the competition is not between one organization and another, it is not correct to say that Maruti in India is competing with Tata Motors, rather it is more appropriate to say that Maruti's supply chain is competing with the supply chain of Tata Motors, so the supply chain competes with another. supply chain and therefore for the success of the organization for the success of the organization it is very important that we develop the competence of the entire supply chain it is not the competence of a single organization if Apple competes with Samsung so it is not Apple and Samsung directly, but it is the result of the entire Apple supply chain, which competes with the entire Samsung supply chain because there are many wholesalers, retailers and there are a large number of players on the left side of these manufacturers, which It will also happen at our next arrival.

Slide, we'll go to those as well and only then this competition takes place between one supply chain and another supply chain, so these are some generic supply chains, but as we go through this course we'll look at more supply chains. specific ones that we also know are coming. Let's look at a very specific example of a supply chain where a customer goes to buy detergent at a supermarket in Big Bazaar mall and see how things happen in this real supply chain. Those were the generic supply chains on the previous slide. Now this is an example of a real supply chain.

In this particular case, you will see that the customer comes to the Big Bazaar to buy the detergent and the Big Bazaar keeps that detergent. Now, how many different parties are involved in this whole process? The Big Bazaar is procuring the detergent from Procter & Gamble not Proctor and Agile is manufacturing the detergent or any other manufacturer who is manufacturing the detergent requires plastic producer requires packaging requires chemical manufacturer and they also like the plastic producer further demands that supplier as chemical manufacturer get the plastic granules, this packaging supplier requires wood industry and paper manufacturer. The paper manufacturer is the supplier to the packaging industry and the paper industry requires the wood industry and then again this chemical manufacturer which is required to make the detergent so now you will get a product like detergent. from the Big Bazaar and that is manufactured by some manufacturer like PNG and someone like that, even the wood industry in that detail of supply for a normal customer, for a normal customer, it is very difficult to realize that the detergent that I am buying in a El big Bazaar mall is actually originating the supply chain of the timber manufacturer or the timber industry but when you look at it in a very holistic way you will find that this whole supply chain is there and now because you can say limitation because our interest is not that much.

Furthermore, you may find that there may be few suppliers before this chemical manufacturer and there may also be some other suppliers before this paper manufacturer. Also, here I have only listed the wood industry, but there may be other suppliers too before this paper manufacturer, so just to give you an idea of ​​what the actual supply chain of a supplied network looks like, so you don't have only one supplier here, but it has avariety of suppliers supplying different types of components, do not differ in any way in different types of raw materials for Procter & Gamble and then. the final product is going to be made and finally you get a packet of detergent in the big shopping mall so in this way this seems very simple but there are so many people we have to manage and therefore this management can provide very important competitiveness.

For the organization to go further, this slide is very important to understand that we normally feel or normally in our daily discussion we are more concerned about the flow of products in the supply chain, but in reality, as I told you at the beginning, In the second slide, in a supply chain, we actually have the flow of three important elements and these three important elements are information products and first of all, you can see the arrows in both directions on this slide just to tell you normally the main thing that flowing. the supply chain, which is product, and the product flows from the manufacturer's side to the customer's side, the product flows from the manufacturer's side to the customer's side, but today, due to environmental issues and so many others issues related to costs, many products also flow in reverse. direction too and therefore we have arrows regarding the product in both directions, you have an example of LPG cylinders, so full LPG cylinders flow from manufacturer to manufacturer but empty cylinders flow from customer to manufacturer for refilling , has glass bottles of Coca-Cola Pepsi. full bottles flow from manufacturer to customer but empty bottles flow from customer side to manufacturer so and enPharma in FMCG and in a variety of these organizations also has expired products so expired products flow from customer side to manufacturer's side for proper disposal.

Information is also very important related to product availability flows from the manufacturer's side to the customer's side, but the information is related. to what types of products are required in what quantity these products are required that type of information flows from the customer side to the manufacturer side so that new products can be developed accordingly, designs can be changed accordingly , quantities can be adjusted for all of those things. Information flows in both directions: funds, which is the third important flow in the supply chain, normally the flow of funds whose source is the customer, the customer is the only positive source of cash flow or front flow in this supply chain, but when We talk about reverse logistics when we talk about products that go from the customer side to the manufacturer side, in that case the funds can flow from that left side to the right side as well, so the arrows in all three cases , product information and funds are in both directions, but one thing is very important: the information flow is independent, while the flow of products and funds are related, the direction of the flow of products and funds is always opposite each other if products flow from left to right, so in that case funds will flow from right to left and if products flow from right to left then in that case funds will flow from left to right so these radicals are restricted directions and the information flow is independent, it can flow independently in both directions, so these are three important flows in the supply chain normally most of our cost related illnesses are related to the product flow and how product flow is carried out in your supply chain, but at the same time, when we talk about supply chain analysis, the flow of information is equally important because today we are moving towards real-time decision making of the supply chain and for this the efficient flow of information is very, very important in this particular case so that our decision making becomes more efficient.

It is helpful to help the supply chain and ultimately help the organization's goals. Now let's see what the typical objectives of a modern supply chain are. So in the modern supply chain, the goals are to maximize the value that we are creating in the supply chain. chain The value of the supply chain is actually the difference between what the final product that we offer to the customer is worth and the value that the customer gives for it and we can directly relate this value to the profitability of the supply chain and only to give you the idea of ​​the process of this value in the supply chain.

This slide is very useful for us. Now in this case, you have three entities on the left side of the manufacturer and these are suppliers. These are suppliers of the manufacturer we called. They are level 1 suppliers, level 2 suppliers, level 3 suppliers, they supply raw materials, they supply components, they supply assembly parts, etc. to the manufacturer and most of the added value of this duty until the manufacturer finishes the final product is due to the processing and manufacturing activities, you are doing a lot of processing, you are painting, you are manufacturing and all these things are happening, so that an increase in added value occurs due to all these activities once the product leaves the manufacturer and the value reaches the wholesaler and the customer.

Addition is also taking place in these phases, but here the added value is due to marketing and logistics activities, so we have to see that finally when the product reaches the hands of the customers, what is the value that the product has acquired and how much? The customer is paying for that value and we really want to maximize this difference so that that difference is actually the profitability of the organization, so it is very, very important to understand that we need to add value, but for that added value, how much is ready the client? pay if it adds excess value and making it difficult to get money out of the customers' pockets, then your profitability will certainly be under the question mark, so you need to make sure that you do not waste your resources on those things that you do not have significant value and therefore the concepts will help us achieve that goal.

For example, this slide shows that if I buy a micro math mobile phone at the price of Rs 10,000 and the supply chain, this is the supply chain revenue. when I pay Rs 10,000 for the purchase of a Micromax mobile phone, if I pay Rs 10,000, this is supply chain revenue and the supply chain incurs costs to procure storage, transportation, components, assembly, etc., then all that is the supply chain cost now, the difference between this Rs 10,000 and the sum of all these costs is the supply chain profit and throughout this course our objective is to maximize this supply chain profit. supply chain so that supply chain profitability is a total profit that will be shared by all. stages of the supply chain now it is also very important to understand that when we talk about the supply chain, we are talking about total profits and that the total profits are shared between all these supply chain partners in all these stages, so I'm NOT talking about profits. of an individual stage or individual member of the supply chain, so the success of the supply chain should be measured by the total profitability of the supply chain and not by the profits of an individual stage and as soon as we start the stage individual, the very objective of the supply chain, the very objective of working together is defeated and then the purpose of competing with the supply chain, competing with the supply network will be lost, so all the time we must keep this in mind. account and later, with the help of some data and some modeling exercises, we will see that How this supply chain profit that we are talking about as a whole is always greater than what we talk about profit at the individual stage, so which is not like a predication but can be proven with the help of some kind of quantitative data also now.

We also need to look at the evolution of the supply chain over the last hundred years and we will use our second part of the conference to discuss the evolution of supply chain management, so at this time we will stop here to discuss what the supply chain and how we should do business in a supply chain environment with the help of coordination with the help of all the entities working together and not think about the individual profits of the individual supply chain or the individual benefits; It is a business with the help of coordination with the help of cooperation of all members of the supply chain and therefore the success of the supply chain lies in coordination.

Supply chain success lies in trusting each other and these are the fundamentals of supply chain management. Thank you so much.