Mr. Thilak Rajan

CII IL – St Joseph Engg College
Module 1 : Overview of Supply Chains
 Overview of SCM
 Evolution – Macro and Micro Analysis
 Current Trends in Supply Chains
 Supply Chain Re-structuring Decisions
 Supply Chain Strategies Cost Management
 Supply Chain Forecasting : Managing Bull Whip
 Managing Supply Chain Performance and Risk
 Supply Chain Resilience
 Supply Chain Sustainability
Overview of S C M
It is the flow of product

It is the flow of information
Is it so simple ?
Why so much of hype ?
Overview of SCM
Overview of SCM and Definition
Supply chain management (SCM) is the process of managing the flow of goods, data, and
finances related to a product or service. It includes the following activities:
•Procurement: Acquiring materials, goods, and services to meet business needs
•Product lifecycle management: Managing a product throughout its entire lifecycle, from ideation
to disposal
•Supply chain planning: Anticipating product demand and coordinating the supply chain to deliver
it
•Logistics: Including transportation and fleet management
•Order management: Managing orders

Evolution of SCM – Macro level
Supply chain management
(SCM) has evolved over time
due to a number of factors,
including:
• Globalization
• As businesses expand
globally, supply chains
become more complex,
which has led to the need for
more advanced SCM
solutions.
• E-commerce
• The rise of online shopping
has increased the demand
for SCM and put pressure on
supply chains to be more
efficient and responsive.
• Technology integration
• The integration of
technologies like AI, IoT, and
blockchain has
revolutionized SCM. These
technologies are helping to
create smarter, more
responsive, and highly
efficient supply chains.
Current Trend of SCM – Lucrative
 Digitization
 Artificial Intelligence and Machine Learning
 Visibility, Traceability and Location Intelligence
 Cybersecurity
 Disruption and Risk Management
 Investment in Systems and People Source : IBEF – Indian Brand Equity Foundation
 Agility and Resilience
 Digital Supply Chain Management
As the Indian manufacturing and retail sector

grows, there will be demand for SCM
professionals.
For those keen, it is the right time to pursue MBA

in Supply Chain Management to leverage
lucrative opportunities in the supply chain
function.
Supply Chain Restructuring - Significance
Supply chain restructuring is a fundamental modifications to a company's supply

chain SOPs that affects all its functions and activities.
It can involve a number of things, including:
•Streamlining operations by reducing redundancies and changing relationships with

trading partners
•Optimizing processes by Improving manufacturing, transportation, and storage
•Finding new suppliers that better fit the company's needs
•Outsourcing non-core activities to companies that can improve logistics,
e.g. a third-party logistics (3PL) firm
•Using automation to improve efficiency and resolve labor shortages
•Protection of Supply Chain from Geopolitical Risks
•Facilitate Company’s growth and increasing margins
•Overall improve the customer satisfaction
Supply Chain Restructuring Decision for India
• Omni-channel integration
• This can create a seamless shopping experience by integrating all distribution
channels.
• Simplifying the supply chain

• Sourcing directly from manufacturers can reduce costs.
• Using technology
• Integrating physical networks with technology like artificial intelligence,
blockchain, and IoT can make supply chains more sustainable.
• Control towers
• These can help drive a consensus on root cause analysis across teams, which
can improve productivity and response agility.
• Robust tax compliance systems

• These can help ensure correct tax calculations and reduce compliance risks
• Supply chain restructuring can help companies identify weaknesses in their

supply chain and develop strategies to address them.
Supply Chain Strategies Cost Management
1. Leverage meaningful demand forecasting – Simulation, Scenario Planning,

What If Analysis
2. Improving transportation and logistics – Track and Trace of consignment,

Proactive corrections / Risk Managing, Multimodal, Outsource
3. Inventory analytics (Stock outs, Over stocks, Hygiene, Age Analysis)
4. Enhancing operational efficiency – K P Is (Financial and non-Financial)
5. Upskill employees with proper training – Skill Matrix, Skill Development, Job
Rotation, Mock Leading
Supply Chain Forecasting – Managing Bull Whip
Bullwhip Effect in Supply Chain
The bullwhip effect is a supply chain phenomenon where small demand
fluctuations at the retail level cause larger fluctuations as they move up the
supply chain. This can lead to excess inventory, lost revenue, and
overproduction.
https://youtu.be/4YqOqECbPH8
Ways to manage Bullwhip Effect
 Improve demand forecasting: Use advanced analytics tools to process large

datasets and provide accurate demand forecasts.
 Enhance communication: Foster a culture of collaboration and trust among
supply chain partners.
 Reduce lead times: Shorter lead times can help reduce the bullwhip effect.
 Implement VMI and JIT: These strategies can help reduce the bullwhip effect.
 Adopt collaborative planning: Collaborative planning can help reduce the
bullwhip effect.
 Reduce product variations: Focusing on more standardized products can
simplify the supply chain.
 Use technology: Use technology like RFID, IoT, and sophisticated inventory
management systems to enhance visibility and enable real-time tracking
Managing Supply Chain Performance
Why - To find areas to achieve savings, improve efficiency and exceed customer
expectations by reducing delivery time.
How - The best way to optimize your supply chain performance is to measure
KPIs and adjust.
e.g., inventory turnover, transportation costs, warehousing expenses, fulfillment

cycle time, on-time delivery, lead time, order accuracy and production cycle time
to improve efficiency across your entire supply chain. Measuring these KPIs
uncovers inefficiencies and gaps in the supply chain process.
Supply Chain Performance KPIs
On-time delivery rate as a KPI for supply chain performance
The on-time delivery rate refers to the percentage of orders you deliver to
customers within the promised timeframe. This KPI holds significant importance
because it directly affects customer satisfaction and overall business success
Inventory turnover ratio as a KPI for supply chain efficiency

The inventory turnover ratio measures the number of times a business sells and
replenishes its inventory within a specific period.
Inventory turnover ratio:
Inventory turnover = cost of goods (COG) sold / average value of
inventory
Order accuracy rate as a KPI for supply chain quality

Order accuracy rate measures the quality of supply chain operations. It
represents the percentage of orders fulfilled correctly without errors or
discrepancies. A high order accuracy rate is indicative of a well-
functioning and efficient supply chain. Maintaining a high order accuracy
rate is crucial for several reasons: When orders are fulfilled accurately,
customers receive the correct products in the right quantities and specifications,
Supply Chain Performance KPIs
Carrying Cost of Inventory :carrying cost of inventory is a more reliable benchmark
than ISR in supply chain analysis. Carrying costs are usually 20-30% of the total
cost of inventory, but will vary with your industry and business size.
inventory carrying cost:=Inventory carrying rate x Average inventory
value
Purchase Order Tracking

Your order status metrics are definitely something you’ll want to track
Supplier On-time Delivery – OTIF of suppliers
DSI – Days Sales of Inventory

DSI is the average number of days your company takes to sell its inventory. This
metric is useful when analyzing your sales efficiency
Freight Cost Per Tonne Shipped

Knowing your freight costs is essential for correct pricing and avoiding
operational losses. You might be paying more for freight,
Tips for effective supply chain performance measurement
1. Define clear and relevant KPIs aligned with business objectives
2. Establish data collection and reporting mechanisms
3. Regularly monitor and analyze performance data
4. Benchmark against industry standards and best practices
5. Leverage technology for supply chain performance measurement
6. Implement predictive analytics for proactive decision-making
7. Conduct regular cross-functional collaboration sessions
8. Engage a specialist like 3PL

Supply Chain Resilience
Supply chain resilience is a supply chain's ability to respond to disruptions and

minimize their impact on costs, revenues, and customers.
Resilient supply chains are able to:
 Respond quickly: Respond to disruptions quickly through flexible planning and

forecasting
 Adapt to change: Adapt quickly to changes in supply and demand
 Predict disruptions: Use data science to predict disruptions and react quickly
 Balance flexibility and efficiency: Strike a balance between flexibility and

efficiency
How to build Resilient Supply Chain
Here are some ways to build supply chain resilience:
• Strategic planning: Synchronize all supply chain components through strategic

planning
• Diversify suppliers: Diversify suppliers and manufacturing partners
• Implement buffers: Implement capacity and inventory buffers
• Risk assessment: Identify weak spots, such as single points of failure,

concentration risk, and pinch points
• Risk management: Develop contingency protocols for specific disruption

scenarios
• Risk avoidance: Take adequate insurance coverage and prioritize cybersecurity

Metric for measuring
and data privacy supply chain resilience is time to recover (TTR), which is
how long it takes a company to return to normal functioning after a disruption. A
short recovery period indicates a resilient supply chain
SCM Software to support Resilience
Supply Chain Sustainability
It is achieved by It refers to the ability and In this, products are

successfully integrating willingness of a business to disassembled or
environmentally openly disclose information reduced to their raw
responsible principles about the provenance of materials form, and
and benchmarks into goods and labour and end-to- remade into sellable
supply chain end supply chain practices products – thus
management. This allowing businesses
includes product to achieve the
design, materials environmental
sourcing, benefits of recycling
manufacturing, while recouping costs
logistics, and end-of-life in the process.
Sustainable Supply Chain –
How it works and its Benefits
 Sustainable supply chains work by collaborating
 Sustainable supply chains work by leveraging the best available

technologies.
 Sustainable supply chains work by setting consistent standards.
 Sustainable supply chains work by communicating their successes.
Benefits
1. Cost Control
2. Building Royalty and Reputation
3. Minimizing Risk and Vulnerability
End of the Module 1

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CII IL – St Joseph Engg College

Module 1 : Overview of Supply Chains

It is the flow of product

•Procurement: Acquiring materials, goods, and services to meet business needs

•Logistics: Including transportation and fleet management

•Order management: Managing orders

As the Indian manufacturing and retail sector

For those keen, it is the right time to pursue MBA

Supply chain restructuring is a fundamental modifications to a company's supply

It can involve a number of things, including:

•Streamlining operations by reducing redundancies and changing relationships with

• Simplifying the supply chain

• Robust tax compliance systems

• Supply chain restructuring can help companies identify weaknesses in their

1. Leverage meaningful demand forecasting – Simulation, Scenario Planning,

2. Improving transportation and logistics – Track and Trace of consignment,

3. Inventory analytics (Stock outs, Over stocks, Hygiene, Age Analysis)

4. Enhancing operational efficiency – K P Is (Financial and non-Financial)

 Improve demand forecasting: Use advanced analytics tools to process large

e.g., inventory turnover, transportation costs, warehousing expenses, fulfillment

Inventory turnover ratio as a KPI for supply chain efficiency

Order accuracy rate as a KPI for supply chain quality

Purchase Order Tracking

Supplier On-time Delivery – OTIF of suppliers

DSI – Days Sales of Inventory

Freight Cost Per Tonne Shipped

1. Define clear and relevant KPIs aligned with business objectives

2. Establish data collection and reporting mechanisms

3. Regularly monitor and analyze performance data

4. Benchmark against industry standards and best practices

5. Leverage technology for supply chain performance measurement

6. Implement predictive analytics for proactive decision-making

7. Conduct regular cross-functional collaboration sessions

8. Engage a specialist like 3PL

Supply chain resilience is a supply chain's ability to respond to disruptions and

Resilient supply chains are able to:

 Respond quickly: Respond to disruptions quickly through flexible planning and

 Adapt to change: Adapt quickly to changes in supply and demand

 Balance flexibility and efficiency: Strike a balance between flexibility and

• Strategic planning: Synchronize all supply chain components through strategic

• Diversify suppliers: Diversify suppliers and manufacturing partners

• Implement buffers: Implement capacity and inventory buffers

• Risk assessment: Identify weak spots, such as single points of failure,

• Risk management: Develop contingency protocols for specific disruption

• Risk avoidance: Take adequate insurance coverage and prioritize cybersecurity

It is achieved by It refers to the ability and In this, products are

 Sustainable supply chains work by collaborating

 Sustainable supply chains work by leveraging the best available

 Sustainable supply chains work by setting consistent standards.

 Sustainable supply chains work by communicating their successes.

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