Scm Infrastructure Pradeep

8/4/2019 Scm Infrastructure Pradeep

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SCM INFRASTRUCTURE

PRADEEP KUMAR. M

MBA (FT), S3SMS, CUSAT


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SCM

A supply chain is a network of facilities anddistribution options that performs the functions ofprocurement of materials, transformation of

these materials into intermediate and finishedproducts, and the distribution of these finishedproducts to customers

Supply chains exist in both service andmanufacturing organizations, although the

complexity of the chain may vary greatly fromindustry to industry and firm to firm.


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SPECIALIZATIONS IN SCM

Specialization within the supply chain began inthe 1980s with the inception of transportationbrokerages, warehouse management, and non-asset-based carriers and has matured beyondtransportation and logistics into aspects ofsupply planning, collaboration, execution andperformance management.


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Implementation Aspects of SCM

SCM implementation is one of the most difficultprojects a company undertakes. If it isimplemented right, it will have a huge savings. Ifnot, it can even break a company. A successful

implementation of an SCM project needs bothBreadth of knowledge (Managerial) and Depth ofknowledge (Technical).


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SCM Planning

In the planning stage, a detailed plan of implementation

is drafted (including budget and schedule), the

infrastructure that will support the program is

established, and the resources necessary to begin the

plan are earmarked and secured.


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A supply chain typically includes the following

functions. Sourcing and procurement of materials

Inventory management

Manufacturing

Warehousing

Distribution


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Some factors to be considered in

sourcing:

Replenishment lead time

On-time performance

Supply flexibility

Delivery frequency/minimum lot size Inbound transportation cost

Pricing terms

Design collaboration capability


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SCM Networking

Public networks.

Private networks


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Electronic Data Interchange ( EDI ) Electronic transmission of data between a

firm & its supplier

Purchase requisitions, purchase orders,acknowledgements, order status & trackingand tracing information

Integration between buyers and sellers

Quick, accurate and interactivecommunication

Internet & B2B Procurement Overcomes compatibility issues of EDI

Easy exchange of files and information

B2B transactions over $1 trillion in 2005


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Organizational infrastructure--how business unitsand functional areas are organized; how change-

management programs are led and coordinated

within the existing organizational structure.


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There are four key enablers for SCM initiatives:organizational infrastructure, technology, andstrategic alliances and human resources

management.


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Technology

Technology has been at the center of changestaking place that affect the supply chain. Whentechnology is mentioned most people immediately

think information technology, but it went beyondinformation. Therefore technology can bepresented in two parts: information technologyand manufacturing and materials managementtechnology.


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Facilities

Facilities are the actual physical locations in thesupply chain network where product are stored,assembled or fabricated. The two major types offacilities are :

Production sites(factories)Storage sites(warehouses)


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Inventory

In SCM the inventory encompasses all the rawmaterials, work in process, and finished goodswithin a supply chain. Changing in the inventorypolicies can dramatically alter the supply chains

efficiency & responsiveness. There are three basic decisions to make

regarding the creation and holding of inventory:


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1. Cycle Inventory: This is the amount ofinventory needed to satisfy demand for theproduct in the period between purchases of theproduct.

2. Safety Inventory: inventory that is held as abuffer against uncertainty. If demand forecastingcould be done with perfect accuracy, then theonly inventory that would be needed would becycle inventory.

3. Seasonal Inventory: This is inventory that isbuilt up in anticipation of predictable increases indemand that occur at certain times of the year.


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Transportation

The transportation entails the moving of inventoryfrom one point to another point in the supplychain. The transportation can take the form of

many combinations of modes & routes, each withits own performance characteristics. There aresix basic modes of transport that a company canchoose from:

hi h i t ffi i t b t


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Ship which is very cost efficient butalso the slowest mode of transport. It islimited to use between locations that aresituated nest to navigable waterways &

facilities such as harbor & canals.

Rails which is also very cost efficientbut can be slow. This mode is also restrictedto use between locations that are served by

rail lines.

Pipelines can be very efficient but arerestricted to commodities that are liquid orgases such as water, oil & natural gas.

.


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Trucks are a relatively quick & very flexiblemode of transport. Trucks can go almost anywhere.

The cost of this mode is prone to fluctuations

though, as the cost of fuel fluctuates and thecondition of road varies.

Airplanes are a very fast mode of transportand are very responsive. This mode is also very

expensive mode & is somewhat limited by theavailability of appropriate airport facilities.

Electronic transport is the fastest mode oftransport and it is very flexible & cost efficient.

However , it can be only be used for movement ofcertain types of products such as electric energy,data, & products composed of data such as music,

pictures & text.


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Information

Information serves as the connectionbetween various stages of a supply chain,

allowing them to coordinate & maximize totalsupply chain profitability. It is also crucial tothe daily operations of each stage in a supplychain for e.g. a production scheduling system.Information is mainly used for the following

purpose in a supply chain:


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Sourcing

Sourcing is the set of business processesrequired to purchase goods & services. Themanagers must first decide which tasks will beoutsourced & those that will be performed withinthe firm. The Components of sourcing decisions


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In-House or outsource: The mostsignificant sourcing decision for a firm iswhether to perform a task in-house oroutsource it to a third party. This decisionshould be driven in part by its impact on thetotal supply chain profitability.

Supplier selection: It must be decided

on the number of suppliers they will have fora particular activity. The must then identifythe criteria along which suppliers will beevaluated & how they will be selected like

through direct negotiations or resort to anauction.


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Inventory

Inventory: exists at every stage of the supplychain as either raw materials, semi-finished orfinished goods.

Purpose: to buffer against any uncertainty that

exists in the supply chain

Inventory Management Systems Ownership of Inventories Specific Contents of Inventories Locations of Inventories Tracking Order Quantity Order Timing


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Vendor Managed Inventory (VMI)

Customer trusts the vendor to manage theinventory:

Vendor monitors customers inventory andcontrols inventory replenishment &decides when to deliver, how much todeliver and how to deliver

VMI transfers inventory management from

the customer to the supplier Provides assurance that product will be

available when required


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Manufacturing

Application of tools and a processing medium tothe transformation of raw materials into finished

goods.


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Just In Time (JIT) Production Systems

take a demand pull approach in which

goods are only manufactured to satisfycustomer orders

purchase of goods or materials is in such away that a delivery immediately precedesdemand or use

Reduces manufacturing lead time and setuptime

Builds strong supplier relationships


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Flexible Manufacturing Systems (FMS) Use flexible automation in which several machine

tools are linked to the material handling system

A central computer controls all aspects of thesystem

Reduced labour

Shorter response time

Better control over manufacturing process


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Computer Integrated Manufacturing (CIM) Incorporates all engineering functions of

CAD/CAM and business functions of the firm

Maintains the operational and info-processingfunctions

Connects various computerized systems to asingle multi-functional system

Expansion affected by high cost & lack of

standardized interfaces


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Materials Requirement Planning (MRP)

Used in complex manufacturing organizations

Backward scheduling process that estimatesrequirement of materials

Advanced planning & scheduling

Helps in coordinating orders from externaland internal sources

Reduced investment in inventory Manufacturing Resources Planning ( MRP II )


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Distribution

Main activity of the supply chain that brings thefinished products to the end customers

Companies make use of

Distribution Centres

Transportation


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Distribution Centre

A warehouse or other specialized building withrefrigeration or air conditioning which aresupplied by transport, such as aircraft, truck,rail or ship, and then re-distributed to retailers

or wholesalers

Foundation of a retailing network

Allow a retail location to stock vast numbers ofproducts without high transportation costs

Large distribution centers service 50-125 stores


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some named major manufacturers have achieved acommon protocol of data operations, by distributingwithout cost to their respective suppliers,appropriate SCM communications software. Advises

firms to retain their electronic data interchangeSCM tools, until Web-based SCM is well establishedinto the manufacturing infrastructure.


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Supply Chain Management Software

As global markets grow increasingly efficient,competition no longer takes place betweenindividual businesses, but between entire valuechains. Collaboration through intelligent e-

business networks will provide the competitiveedge that enables all the participants in a valuechain to prevail and grow.


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REFERRENCES

www.wikipedia.com

http://www.amrresearch.com

http://www.capsresearch.org/

http://www.scmexpertonline.com

http://www.sandiego.edu/business/centers/supply_chain_management

http://www.scmr.com/article/CA6389475.html

Documents

Scm Infrastructure Pradeep