BICYCLE

Supply Chain Management (SCM) from POME by Gautam Koppala

Supply Chain Management (SCM):

Supply chain management (SCM) is the combination of art and science that goes into improving the way your Project finds the raw components it needs to make a product or service and deliver it to customers. POME defines that SCM 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 chains exist in both Project service and manufacturing organizations, although the complexity of the chain may vary greatly from industry to industry and firm to firm.

Definition for supply chain management

“Supply chain management is the management of upstream and downstream relationships with suppliers and customers to deliver superior customer value at less cost to the supply chain as a whole.”

Explanation:

The supply chain is the network of organizations that are involved through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hands of ultimate consumer.( in detail mention above)

Supply chain Optimization

 

Good design is at the heart of an effective supply chain solution.

Solutions must design team offers a wide portfolio of expertise and services, from Logistics network strategy, transport design, warehouse design and simulation, through to operational improvement and inventory analysis

International Supply Chain
Extended Supply Chain Services
Implementation Services

Outsourcing Projects

 

1. 1. International Supply Chain:

International supply chain management solutions must focus on helping customers take increased control of international inbound supply chain to maximize the value of international and global sourcing.

• Give visibility of the upstream supply chain, and enable earlier decision making
• Create a more agile supply chain, better able to respond to changes in consumer demand
• Reduce lead times, inventories, and associated storage costs

Customer-focused solutions are built up from the following core services:

• Origin management, including: vendor management; supplier collections; customs brokerage; consolidation services and value-added services
• Global forwarding, including: air/ocean/road/rail freight forwarding and management; European managed transport
• Destination management, including: port and demurrage management; customs brokerage; de-consolidation and pre-retail services; port to distribution centre transportation; direct store delivery (US only)
• Supply chain visibility and management, including: purchase order management; RFID product tracking; exception management; planning and forecasting; inventory management.
• Global forwarding services are provided across all major routes.

Logistical services that are offered.

• Reverse Logistics for Projects
• Services Logistics for Projects
• Inbound to Manufacturing
• Medical device distribution
• Distribution to stores Management
• Engineering Response

a.) Reverse Logistics for Projects

Reverse Logistics solutions help customers plan, implement and control flow of materials and manage related information, back up the supply chain to recapture values and ensure the safe disposal of goods. Items include the recovery of obsolete or non-operational white goods such as refrigerators, plus the removal of old products on delivery of new or replacement products.

Services include:

• Roll in Management: de-installation of finished goods at the customer’s site
• Returns Management: receiving, sorting, verifying and managing returned products
• Express Delivery: Exchange of Dead On Arrival product

 

b.)  Service Logistics for Projects

LOGISTICS FIRM’s service and replacement parts service involves the management of manufacturers’ replacement parts delivered to and from customers according to pre-defined service levels or warranty agreements on a one, two, four or eight-hour and next-day basis, 24 hours a day, seven days a week.

PROJECTS FIRM works closely with customers to overcome common issues such as:

• Poor parts availability
• High inventory investment
• Long lead times, accentuated by global sourcing
• High levels of customer returns
• Poor visibility, reporting and control
• Cost control of the demand chain

Key services include:

• International freight forwarding
• Domestic and regional inbound deliveries
• Inventory planning, forecasting, procurement and analysis
• Distribution centre operations
• Outbound delivery

The entire process is underpinned by a web-enabled electronic order processing and order monitoring tool.

 

 

c.) Inbound to Manufacturing

Inbound to manufacturing is the complete end-to-end Logistics for Projects management of inventories, facilities and labour associated with the inbound flow of materials from vendors and supplier origins to consumption points in manufacturers production lines.

The service encompasses:

• Network, transportation and facility design
• Inventory optimization
• Supplier management
• Transportation management
• In-plant services

Key to the service is integrating manufacturers’ forecasting, order management and supply chain execution processes with their component suppliers.

 

Value is created for manufacturers and component suppliers throughout the world by:

• Enabling a robust and cost-effective supply chain
• Providing the necessary visibility so that the location of all components  within the supply chain is known to all supply chain participants
• Reduce inventory and investment costs
• Improve delivery times
• Co-ordinate multiple components more efficiently

 

d.) Distribution to stores management

Distributions to store services must focus on helping retailers create efficient and flexible supply chains to deliver product to retail outlets at high levels of service. These solutions are built from several core services: reverse Logistics collections; sortation; processing; repair/refurbishment; value recovery; disposal and compliance.

e.) Engineering Response

Through our Engineering Response services, we manage the materials supply chain from works planning and inbound goods through to on-site works, delivering stock out to engineers, builders and construction workers in the field.

 

2. Extended supply chain services

It not only provides physical Logistics for Projects services but also must manage other enhanced supply chain services, improving efficiencies and reducing costs.

a.) Order Management

Receipt, management, execution, sequencing and dispatch of orders in a timely manner.

b.) Call Center Management

A Call Centre manages orders, monitors sales activities, provides customer services and functions as a Help-desk.

c.) Global Inventory Management

PROJECTS FIRM gives the customer a global view of inventory, thus enabling informed decisions regarding the disposition of stock.

d.) Consolidated Billing Services

The creation of a consolidated and categorized invoice, based on all services performed in a specific time-period by more than one service provider, made available in an agreed format.

e) Freight & Customs Solutions

 

1. 2. Implementation Services:
2. a. Implementation and Project Management

Implementation starts by defining project aims, setting the targets and describing the deliverables in detail. The major topics in implementation include business processes, engineering, real estate, IT systems, migration, HR, finance and legal considerations.

1. b. Quality Management

Total Quality Management is a management strategy that integrates quality orientation into the whole structure and workflow of a company by using methods and techniques of quality management

Corporate Policy for Quality, Health Safety Environment, (QHSE) is based on five corporate values:

• Customer satisfaction: Providing customers and their customers with excellent, high value Logistics for Projects solutions
• Employee motivation: Building on the know-how and stimulation of individual potential in multi-cultural teams
• Operational excellence: Continuous improvement of processes and services to fulfill or exceed expectations
• Corporate citizenship: Acting as a responsible corporate citizen in all countries
• Shareholder reward: Developing a sustainable business to provide increasing shareholder value

Performance Management:

Performance management is a key part of the supply chain. Measured elements are reviewed as a system, as each component interacts with all the other parts around it. Performance measuring not only records historical performance but also provides early indication of any service slippage.

 

Outsourcing Projects

Outsourcing involves taking over and managing previous in-house Logistics for Projects operations, including:

• Distribution centers
• Transport operations
• Back-office functions
• Supply chain management functions
• After sales services

Simple Product Supply Chain

A sequence of activities And organizations involved in producing And delivering a good or service is called supply chain.

 

The following are five basic components of SCM.

1. Plan – This is the strategic portion of SCM. You need a strategy for managing all the resources that go toward meeting customer demand for your product or service. A big piece of planning is needed to develop a set of metrics to monitor the supply chain so that it is efficient, costs less and delivers high quality and value to customers.

2. Source – Choose the suppliers that will deliver the goods and services you need to create your product. Develop a set of pricing, delivery and payment processes with suppliers and create metrics for monitoring and improving the relationships. And put together processes for managing the inventory of goods and services you receive from suppliers, including receiving shipments, verifying them, transferring them to your manufacturing facilities and authorizing supplier payments.

3. Make – This is the Project step. Schedule the activities necessary for projects, testing, packaging and preparation for delivery. As the most metric-intensive portion of the supply chain, measure quality levels, production output and worker productivity.

4. Deliver – This is the part that many insiders refer to as logistics. Coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to get products to customers and set up an invoicing system to receive payments.

5. Return – The problem part of the supply chain. Create a network for receiving defective and excess products back from customers and supporting customers who have problems with delivered products.

 

Innovative Supply Chain Development

Supply Chain Management services are delivered across industry sectors and provide expertise, knowledge and resources in terms of personnel and supply chain tools. All services are targeted at optimizing logistical operations in both process and strategy, and are aligned to the client’s commercial expectations.

The services are as follows:

• Strategic Logistics for Projects Consulting
• Lead Logistics for Projects Provider
• Consulting and providing Transport optimization: Route-Pro and Trans-Pro
• Consulting and providing Supply Chain Design
• Consulting and providing Transportation
• Engineering, optimization and re-engineering
• Implementation and Project Management
• Process Management
• Outsourcing

These solutions are built from several core services including reverse Logistics for Projects:

• Logistics for Projects network strategy
• warehouse design and simulation
• Transport modeling.

What is the extended supply chain?

The extended supply chain is a clever way of describing everyone who contributes to a project. So if you make text books, then your extended supply chain would include the factories where the books are printed and bound, but also the company that sells you the paper, the mill where that supplier buys their stock, and so on. It is important to keep track of what is happening in your extended supply chain because with a supplier or a supplier’s supplier could end up having an impact on you (as the old saying goes, a chain is only a strong as its weakest link). For example, a fire in a paper mill might cause the text book manufacturer’s paper supplier to run out of inventory. If the text book company knows what is happening in its extended supply chain it can find another paper vendor.

SCM for a single product, where raw material is procured from vendors, transformed into finished goods in a single step, and then transported to distribution centers, and ultimately, customers. Realistic supply chains have multiple end products with shared components, facilities and capacities. The flow of materials is not always along an arborescent network, various modes of transportation may be considered, and the bill of materials for the end items may be both deep and large.

Traditionally, marketing, distribution, planning, manufacturing, and the purchasing organizations along the supply chain operated independently. These organizations have their own objectives and these are often conflicting. Marketing’s objective of high customer service and maximum sales dollars conflict with manufacturing and distribution goals. Many manufacturing operations are designed to maximize throughput and lower costs with little consideration for the impact on inventory levels and distribution capabilities. Purchasing contracts are often negotiated with very little information beyond historical buying patterns. The result of these factors is that there is not a single, integrated plan for the organization—there were as many plans as businesses. Clearly, there is a need for a mechanism through which these different functions can be integrated together. Supply chain management is a strategy through which such integration can be achieved.

 

Supply Chain Decisions

We classify the decisions for supply chain management into two broad categories — strategic and operational. As the term implies, strategic decisions are made typically over a longer time horizon. These are closely linked to the corporate strategy (they sometimes {it are} the corporate strategy), and guide supply chain policies from a design perspective. On the other hand, operational decisions are short term, and focus on activities over a day-to-day basis. The effort in these type of decisions is to effectively and efficiently manage the product flow in the “strategically” planned supply chain.

There are four major decision areas in supply chain management: 1) location, 2) production, 3) inventory, and 4) transportation (distribution), and there are both strategic and operational elements in each of these decision areas.

 

• Location Decisions

The geographic placement of production facilities, stocking points, and sourcing points is the natural first step in creating a supply chain. The location of facilities involves a commitment of resources to a long-term plan. Once the size, number, and location of these are determined for a Projects material, so are the possible paths by which the product flows through to the final customer. These decisions are of great significance to a firm since they represent the basic strategy for accessing customer markets, and will have a considerable impact on revenue, cost, and level of service. These decisions should be determined by an optimization routine that considers production costs, taxes, duties and duty drawback, tariffs, local content, distribution costs, production limitations, etc. Although location decisions are primarily strategic, they also have implications on an operational level.

• Inventory Decisions

These refer to means by which inventories are managed. Inventories exist at every stage of the supply chain as either raw materials, semi-finished or finished goods. They can also be in-process between locations. Their primary purpose to buffer against any uncertainty that might exist in the supply chain. Since holding of inventories can cost anywhere between 20 to 40 percent of their value, their efficient management is critical in supply chain operations. It is strategic in the sense that top management sets goals. However, most researchers have approached the management of inventory from an operational perspective. These include deployment strategies (push versus pull), control policies — the determination of the optimal levels of order quantities and reorder points, and setting safety stock levels, at each stocking location. These levels are critical, since they are primary determinants of customer service levels.

• Transportation Decisions

The mode choice aspect of these decisions is the more strategic ones. These are closely linked to the inventory decisions, since the best choice of mode is often found by trading-off the cost of using the particular mode of transport with the indirect cost of inventory associated with that mode. While air shipments may be fast, reliable, and warrant lesser safety stocks, they are expensive. Meanwhile shipping by sea or rail may be much cheaper, but they necessitate holding relatively large amounts of inventory to buffer against the inherent uncertainty associated with them. Therefore customer service levels, and geographic location play vital roles in such decisions. Since transportation is more than 30 percent of the logistics costs, operating efficiently makes good economic sense. Shipment sizes (consolidated bulk shipments versus Lot-for-Lot), routing and scheduling of equipment are key in effective management of the firm’s transport strategy.

 

Supply Chain Modeling Approaches

Clearly, each of the above two levels of decisions require a different perspective. The strategic decisions are, for the most part, global or “all encompassing” in that they try to integrate various aspects of the supply chain. Consequently, the models that describe these decisions are huge, and require a considerable amount of data. Often due to the enormity of data requirements, and the broad scope of decisions, these models provide approximate solutions to the decisions they describe. The operational decisions, meanwhile, address the day to day operation of the supply chain. Therefore the models that describe them are often very specific in nature. Due to their narrow perspective, these models often consider great detail and provide very good, if not optimal, solutions to the operational decisions.

 

Network Design Methods

As the very name suggests, there must be some methods that determine the location of production, stocking, and sourcing facilities, and paths the product(s) take through them. Such methods tend to be large scale, and used generally at the inception of the supply chain.

Clearly, these network-design based methods add value to the firm in that they lay down the manufacturing and distribution strategies far into the future. It is imperative that firms at one time or another make such integrated decisions, encompassing production, location, inventory, and transportation, and such models are therefore indispensable. Although the above review shows considerable potential for these models as strategic determinants in the future, they are not without their shortcomings. Their very nature forces these problems to be of a very large scale

What are some emerging technologies that will affect the Supply Chain?

The most notable is Radio Frequency Identification, or RFID. RFID tags are essentially barcodes on steroids. Whereas barcodes only identify the product, RFID tags can tell what the product is, where it has been, when it expires, whatever information someone wishes to program it with. RFID technology is going to generate mountains of data about the location of pallets, cases, cartons, totes and individual products in the supply chain. It’s going to produce oceans of information about when and where merchandise is manufactured, picked, packed and shipped. It’s going to create rivers of numbers telling retailers about the expiration dates of their perishable items—numbers that will have to be stored, transmitted in real-time and shared with warehouse management, inventory management, financial and other enterprise systems. In other words, it is going to have a really big impact.

Another benefit of RFIDs is that, unlike barcodes, RFID tags can be read automatically by electronic readers. Imagine a truck carrying a container full of widgets entering a shipping terminal in China. If the container is equipped with an RFID tag, and the terminal has an RFID sensor network, that container’s whereabouts can be automatically sent to Widget Co. without the truck ever slowing down. It has the potential to add a substantial amount of visibility into the extended supply chain.

With today’s emphasize on cutting costs and streamlining expenses, many companies are looking to improve their bottom lines with more effective supply chains. Unfortunately, many people involved with companies don’t have a clear understanding of what a supply chain is or how it fits into the companies overall strategy.

Technology also plays an important role in the success of supply chain management. Even though the supply chain concept pre-dates the Internet, only through the use of web-based software and communication can it truly reach its full potential. Before the Internet, companies were limited because they were not able to receive or to send updates, feedback, or other important information in a timely fashion. Additionally, companies were limited in their ability to work with global partners because of language barriers and time differences. Using the Internet to handle most of the elements involved in supply change management, including procurement and communication, makes the exchange of data and the running of the supply chain faster.

One of the biggest benefits technology has given to the supply chain concept is the ability for companies to collaborate. These collaborations are designed for the mutual benefit of all parties. For example, a supplier of consumer goods may be linked up via the Internet to one of its distributors so that when the supply gets too low an order for more of those goods can be placed automatically. In this way, the distributor never has to worry about running out of a product and disappointing customers and the supplier doesn’t have to worry about maintaining a large inventory in expectation of demand. Similar systems have also been constructed to send out multiple requests to vendors when an order is placed. Collaborating this way makes better use of existing resources and paves the way for a larger profit margin on all sides of the equation.

 

Example Supply Chain

 

 

1. This flow chart shows a typical manufacturing supply chain work flow detailing which areas of the business are involved.

2. The sales department identifies a need for a product. The sales department tell the marketing department about their idea and provide any supporting information / data.

3. The marketing department use business analysts to support the project and to complete the research.

4. Data and supporting evidence is passed back to the marketing department for completion of a business plan.

5. A fully detailed business plan is forwarded to the Business Unit Manager / Directors.

6. This unit comprises of the senior business directors or managers who make a decision on the project.

7. After approval the plan is passed back to the analysts to prepare and implement the manufacturing process.

8. Details of raw materials and components passed to purchasing.

9. Purchasing work with logistics and transport to plan the purchase and delivery of the materials to the manufacturing plant.

10.Suppliers receive orders for product and then despatch on agreed transport on agreed dates.

11. Carriers approved by the business transport the raw materials and components to the manufacturing site.

12. Products are received into the warehouse and then moved to manufacturing.

13. Finished products are moved from manufacturing to the finished goods warehouse which might be situated locally or in a remote location.

14. Finished goods are put into inventory awaiting orders. The company computer system is updated. Product is now available to sales.

15. Customers place orders through customer services.

16. Customer Services take orders and input them to the company computer system.

17. The central computer system maintains transaction records and provided visibility of product for sale.

18. An order is completed and a pick list sent to the warehouse.

19. A copy of the order is sent to the export department for completion of export documentation.

20. Export department manages the final despatch of the product and produces any export documents.

21. Documents are sent to the warehouse to meet up with the finished order.

22. The order is despatched by the warehouse.

23. The transport company collects the consignment and delivers it to the customer based upon the INCO terms of carriage.

24. As stock has now been used the computer system generates a request for new stock.

25. The re-order process generates a request to the purchasing department to place new orders with the suppliers.

 

Gautam KOppala,

POME Author

About the Author

GAUTAM KOPPALA, With over   a decade, track record of successful leadership, excellent results through strategic skills in driving revenue and profit growth. Demonstrated ability to identify and trouble shoot critical issues impacting productivity, cost, distribution, marketing, Strategic positioning, sales and financial operations, with innate ability to build and maintain strong client relationships in operations. Expert in distilling and managing processes, enhancing internal structures, and promoting multi-skilled team competencies via nurturing mentorship and inspirational leadership. Engagements have spanned operational, strategic, technological and change management roles. Academically, I am a cum laude graduate with a Bachelor of Technology degree in Electrical and Electronics Engineering (B-Tech E.E.E.) and a post graduate in Masters in Human Resources Management (M.H.R.M.) and Masters of Foreign Trade (M.F.T.). As you will see my Post Graduation’s were been studied part-time, as well as working full-time as an Engineer. I feel that this demonstrates my ability to maintain dedication, motivation and enthusiasm for a project management over a long period of time. In addition, balancing full-time work with study has perfected my time-management and organizational skills. I believe that my college degrees and gamut certifications in combination with my extensive broad-based work experience along with my drive, resourcefulness and determination, would make me an excellent candidate for a senior management position with any company. Highlights of my background include Operations related Commercial, Supply chain, Sales with a magnificent experience in Project management, technically oriented towards Automation and Security Systems in Industrial and Building sectors. Presently, writing a book on Projects and Operations Management (comprise of 12 volumes, 6K pages), and awaited for the reputed publications. These books can be checked in Google books and other search engines too.

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