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The new mantra of business efficiency and competitive advantage SUPPLY CHAIN MANAGEMENT

SCM : 

SCM Aims to enhance internal as well as external efficiencies in the flow of materials Includes raw materials, WIP inv, sub-assys, components and finished goods Envisages minimisation of cycle time or through-put of a product’s mfg process Builds alliances with suppliers, distributors, retailers and customers A tough and complex process of change : View Supply Chains as Profit centers rather than as Cost centers.

SCM : 

SCM Needs full support and 100 % involvement of the top management

Hello, What’s SCM ? : 

Hello, What’s SCM ? It integrates operations, systems and supply chains across the full range of business processes/ functions and accrues substantial advantages. Business Strategies Systems/Information Strategies Supply Chains

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Multi-Location Co’s orbit

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Multi-Location Co’s orbit Examples -Dell -ABB -Retail store chains


3 PHASES OF SCM Phase I : Ramp-up and re-engineer, fine-tune logistics systems within Materials Dept. Attain max efficiency. Includes JIT, vendor held inventories. Phase II : Encompasses full organisation, all depts who do value-addition. Phase III : Suppliers, distributors, retailers, relevant govt agencies and end-users/customers are added to Supply Chain Constellation

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Material Dept Production Dept Assembly Ware -house Sales D1 D2 D3 D4 D5 d1 d2 d1 d2 d3 d1 d2 d1 d2 d3 d1 S1 S2 S3 S4 S5 S6 Govt Agencies Regulatory bodies Industry Asso Labor Union SCM…Pictorally,

SCM : Phase ISourcing and Logistics : 

SCM : Phase ISourcing and Logistics Review objectives and stockage policy. Fix KRAs. Minimise stock levels of ‘A’ items to 0, ’B’ items to 1 week and ‘C’ items to 4 weeks. Computerise entire inventory, transact all materials on-line. Develop vendor base, Vendor assessment & rating. Finalise ARCs for regular items. Minimise time spent by items in stores. Co-ordinate with prod schedules. Enhance inventory turn-over.

IDLE TIME : Enemy No 1 : 

IDLE TIME : Enemy No 1 Value Addition Indent Received P1 P2 P3 P4 P5 t1 t2 t3 t4 PO prepared Item received Inspection Delivered PO placed to user Total Process time = T Total idle time = t1+ t2 + t3+ t4 ‘T’ Time

Sourcing and Logistics : 

Improve storage systems & ware-housing Ensure competitive prices in purchases Minimise cycle time of purchase Deliver items to users at the work-place Ensure fair-play by staff in POs Respect and treat suppliers and vendors well Sourcing and Logistics

SCM : Phase IIInternal Excellence : 

SCM : Phase IIInternal Excellence Carry out process mapping of the product cycle, from beginning to end, across all depts Analyse process cycle Minimise mov of SFGs through the process-cycle Remove waiting time at each work-station/machine/sub-process. Optimise machines/processes. Visibility of SFGs all through- out the process cycle Review and upgrade MHE

SCM : Phase IIInternal Excellence : 

Inv levels of FGs – decide in sync with Sales dept. Adopt modular concept for product variation/ customisation e.g. Dell, Asian Paints Ware-housing & logistics of FGs – speed and accuracy in delivery of orders Optimise ‘order to cash’ in sync with Sales dept SCM : Phase IIInternal Excellence Spread and enhance the SCM process to the entire company / organisation

SCM : Level IIINet-working the constellation : 

SCM : Level IIINet-working the constellation Business Unit Vendors Suppliers Labor Unions Distributors Govt agencies Customers

SCM : Level IIINet-working the constellation : 

SCM : Level IIINet-working the constellation Integrate vendors as partners in business Finalise long-term contracts / ARCs for select items Encourage high quality control and self-certification by vendors Create vendor based inventories for high cost items Establish intra-net with vendors and distributors, e.g. Exide batteries Attain modular product variation with std basic unit e.g. Indica of Tata Motors, Dell Computers Product customisation to be done at ware-house/ distributor’s end, e.g. MacDonald's Analyse customer base. Pay greater attention to imp customers (top 15 % who generate 70% business) Form alliances with labor unions

Enlarging the SCM Constellation : 

Enlarging the SCM Constellation Strong alliance with industry asso , trade asso Alliance with CII Alliance with business units in forward and backward integration Exploit core competencies and out-source peripherals Participate in seminars, industry Expos Media image mgt Recognise and deliver on social responsibilities Aim for industry leadership

SCM’s competitive advantage : 

SCM’s competitive advantage A fine-tuned manufacturing and delivery system that achieves higher levels of customer satisfaction Instant view of customer preferences Faster response to market demands / trends, with swifter delivery of right products Reduced cycle time Increased inv turn-over, therefore larger savings Maximum use of assets, strengths and net-working Continual improvement all through the SCM

Case-studies : 

Case-studies GE Dell Ford Motors ABB WAL-MART

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The new mantra of business efficiency and competitive advantage SUPPLY CHAIN MANAGEMENT

DELL Inc : A case study : 

DELL Inc : A case study Six manufacturing facilities Limerick, Ireland Xiamen, China Eldorado do Sul, Brazil Penang, Malasia Nashville, Tennessee, US Austin, Texas, US Sale : 150,000 computer systems/ day Average Delivery period : one week

DELL Inc : 

Orders placement at call centers by tele on toll free no. or on the i-net E.g. call centers at Mohali, Chandigarh, 1200 employees; Gurgaon, 600 employees; a new one coming up at Pune SLCs (Supplier’s Logistics Centers) maintained by suppliers by the side of / near-by, each Dell factory Close co-ordination and info transfer through intra-net, between Dell and its suppliers Multiple suppliers for 30 key parts Mr Michael Dell, CEO knows CEOs of each supplier company personally DELL Inc

DELL Inc :Suppliers of key components : 

DELL Inc :Suppliers of key components Microprocessor - Intel Phllipines Costa Rica Malaysia China Memory Card Samsung, Korea Namya, Taiwan Infeneon, Germany Elpida, Japan Graphics Card MSL, China Foxcom, China

DELL Inc : 

DELL Inc Mother board Samsung, Shanghai Quenta, Shanghai Compel, Taiwan Wistron, Taiwan Key board Tianjin, Japan Alps, China Sunrex, China Power cord – Volex, UK. Factories in India China Malaysia …..and so on

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DELL Inc : 

DELL Inc Two hourly updates provided on intra-net by Dell, on unit-wise outstanding orders and qty of parts to be supplied by each supplier On receipt of each two hourly update, supplier is to position his parts in requisite qty at Dell premises within 90 min Each part supplied is with a barcode and loaded on a tray/ stand/ container/ pouch, which is ready for use by the technician at the assembly line/ work-bench

DELL Inc : 

DELL Inc Each supplier responsible for keeping his items full in the SLC Quality : Self certification, six sigma level Takes 30 minutes to : off-load SLC’s truck at Dell, feed in the barcodes and arrange items as per transit storage system

DELL IncOrder No 9ZRJP41 dtd 02 April 2004 : 

DELL IncOrder No 9ZRJP41 dtd 02 April 2004 15: 22, 02 April; Order placed by Mr. Thomas Friedman* from Bethesda on Dell’s toll free No. 800 Item ordered : Computer system, Inspiron 600m notebook Order sent to production system, relevant items allotted to concerned factories. This order was allotted to Dell, Penang, Malaysia on 03 April 04 04 April; Team member - order parts picking – found that one part ‘wireless card’, a PCB was not available Supply was delayed on account of quality issue at SLC at Penang New parts arrived at 10:15 am on13 April Author of ‘The World is Flat’

DELL IncOrder No 9ZRJP41 dtd 02 April 2004 : 

At 11:10, 13 April, Order slip 9ZRJP41 was pulled out by a Dell Penang worker (on a system generated prompt) since now all parts were available A ‘traveller’ carry trolley for components was taken by another worker. He plucked all the required components for the Inspiron 600 m notebook from JIT inventory bins at Dell Penang 11:29, all parts were handed over to technician Mr. Sathini, a team member Sys was assembled and sent to the ‘Burn’ for down-loading specified soft-ware 14:45, 13 April, all soft-ware down-loaded 16:05, 13 April, sys placed in protective foam. Kept in a shuttle box attached with a label DELL IncOrder No 9ZRJP41 dtd 02 April 2004

DELL IncOrder No 9ZRJP41 dtd 02 April 2004 : 

DELL IncOrder No 9ZRJP41 dtd 02 April 2004 Label- Order No, tracking code, system type, shipping order 18:04, 13 April, sys loaded on a pallet (one container box has 75 pallets, each pallet has 152 systems) 18:26, 13 April, Container box left Dell, Penang for Penang Airport 07:41, 15 April, container box arrived by China Airlines 747 at Nashville Airport, US

DELL IncOrder No 9ZRJP41 dtd 02 April 2004 : 

DELL IncOrder No 9ZRJP41 dtd 02 April 2004 11:58, 15 April, Tom’s sys taken out and loaded in a larger carton box along with additional accessories as per order, at Dell Nashville ware-house 12:59, 15 April, order shipped by UPS courier to the customer, tracking No.3WA374253514697 18:41, 19 April 04, Tom’s sys door- delivered at Bethesa, US


DELL IncSCM : HIGHLIGHTS Speed and visibility of info – Intranet Sales-Production-SLC-Suppler Scale and spread of logistics operation Logistics infrastructure Close monitoring of vendor maintained JIT bins at SLCs Merchandising – basic units manufactured and dispatched to destination ware-house, speed of dispatch, lateral co-ordination Tie-ups between Dell, airport authorities, Airlines Accessories, special features added at Dell Nashville ware-house Efficient handling at Dell ware-house, Nashville – in dispatch and delivery to customer Order reshaping – when ‘wireless card’ went out of stock at LSC Penang for 9 days, Dell call centers across the world were ‘reshaping future orders’

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Thank You

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