Module 4 & 5

Sustainability & Challenges

Supply chain Sustainability & Security
• Reverse Logistics Systems is a stage in the supply chain in which the
product is returned from the point of sale to the manufacturer or
distributor for recovery, repair, recycling, or disposal.
Examples:
• Returns made by a customer.
• Returns made by a distributor partner.
• Returns made to be refurbished or remanufactured.
• Packaging reusability or recycling.
The five Rs of reverse logistics are
• returns,
• reselling,
• repairs,
• repackaging and
• recycling.
 Reverse Logistics vs Closed loops
https://youtu.be/N1fLArZZXTE
- Reverse logistics as a process where a manufacturer accepts previously
shipped products from the point for consumption for possible recycling and
re-manufacturing. Eg: damaged printer, malfunction TV
- A closed-loop supply chain management as the design, control and
operation of a system to maximize value creation over the entire life cycle of
a product with dynamic recovery of value from different types and volumes
of returns over time. E.g. empty cartridges, beverage bottles
 Managing Reverse Logistics Flows in
Supply Chain
• Asset recovery—Classifying and disposing of returned items, surplus, scrap,
and obsolete items to maximize returns and minimize cost
• Pricing—Negotiating the best price for products being returned and resold
• Outsourcing—Considering a relationship with a third-party organization to
handle and manage reverse flows in cases where existing personnel,
infrastructure, experience, and/or capital may not be adequate to implement a
successful program
• Zero returns—Developing a policy to exclude returns by giving a returns
allowance and/or “destroying” the product in the field
 Strategic Challenges and Change for
Supply chains
• Production Delays: Implementing lean manufacturing techniques and maintaining
strong supplier relationships can minimize delays.
• Transportation Disruptions: Diversifying transportation modes and routes ensures that
goods can be rerouted quickly in case of disruptions.
• Inventory Mismanagement: Advanced inventory management systems that use real-
time data help in accurately forecasting demand and adjusting supply levels accordingly.
• Changing Consumer Demands: Flexibility and adaptability are key. Companies should
stay attuned to market trends and be ready to pivot their strategies to meet evolving
consumer preferences.
Principles of Supply Chain Management
• Principle 1: Segment Customers Based on Service Needs • Segments customers based on
logistics and supply chain needs.
• Principle 2: Customize the Logistics Network • Stresses the need to develop supply chain
approaches that are responsive to the needs of individual customer segments
• Principle 3: Listen to Signals of Demand and Plan Accordingly • See that demand
planning is responsive to and aligned with market signals such as point-of-sale
information.
• Principle 4: Differentiate Products Closer to the Customer • Postponing product
differentiation and gaining greater understanding and control of cycle times, supply chain
efficiency and effectiveness will be positively impacted.
• Principle 5: Source Strategically • Excellent supply chain management
requires customers and suppliers to work together to meet overall supply
chain objectives.
• Principle 6: Develop a Supply Chain wide Technology Strategy • Replace
inflexible, poorly integrated transactional systems with enterprise-wide
systems.
• Principle 7: Adopt Channel-Spanning Performance Measures • To make
sure the realization of supply chain objectives.
 Focus of SCM
Three areas in which supply chain leaders need to focus as a player to the
growth agenda:
• Think strategic challenges and change for supply chains beyond cost.
• Develop world-class collaboration skills.
• Aggressively grow your personal leadership capabilities.
 Supply Chain Strategies
• Time-Based Strategies
○ Effective strategy based on trade-offs between transportation, inventory,
and warehousing costs as an example
○ Delay product differentiation
○ Reduce cycle Time
 Three factors:  processes  Information  decision making
Financial Strategies
• Reduce inventory - Pull based production techniques
• Facility utilization. - Operate at near optimal efficiency
• Equipment utilization - Maximize the use of materials-handling
equipment in warehouses and transportation
• Outsourcing - Be strategic and customer focused
 Supply Chain Information
• Supply Chain and Information Systems (SC&IS) is a
boundary-spanning field of supply chain networks, which
organizations use to acquire, produce, and deliver goods and
services all over the world.
 Real-world Examples of Successful Supply
Chain Management

1. Amazon: Amazon’s supply chain is a benchmark in supply chain efficiency, using advanced technology and an
extensive logistics network to offer same-day or next-day delivery on thousands of items. Its customer-centric
approach, with features like real-time tracking and easy returns, sets a high standard for customer satisfaction.
2. Zara: The fashion retailer Zara is known for its ability to bring new products to market in just a few weeks. Its
supply chain is optimized for speed, with tight control over every aspect from design to distribution. This allows
Zara to respond quickly to fashion trends and customer demand, ensuring high levels of customer satisfaction.
3. Dell: Dell revolutionized the PC market with its build-to-order model, allowing customers to customize their
computers. This was supported by a highly efficient supply chain that minimized inventory costs and enabled
quick assembly and delivery of custom orders, leading to high customer satisfaction and loyalty.
4. Toyota: Toyota’s “Just-In-Time” (JIT) manufacturing process is a cornerstone of its supply chain efficiency. By
producing goods only as they are needed, Toyota minimizes waste and reduces inventory costs. This approach not
only streamlines the supply chain but also ensures that customers receive high-quality vehicles in a timely
manner.
 Distribution Management
• Distribution management focuses on the timely delivery of goods and
prevention of loss through distribution channels.
• It is part of the larger logistics system that includes the planning and
creation of processes for managing supplies of goods and transport.
• It involves several aspects, such as packaging, routing, warehousing
storage, and fleet management.
 Distribution Channels

• Wholesale distribution channels are business to business distribution channels

charged with delivering goods from raw material suppliers or manufacturers to
wholesalers. For example, oil companies must move their product to oil refining
companies.
• Retail distribution channels are concerned with the delivery of goods from
wholesalers to retailers, such as a cosmetics company delivering goods to various retail
stores.
• Exclusive distribution channels are those that deliver goods from a manufacturer only
to specifically authorized or designated customers. For example, auto manufacturers
deliver their cars to authorized dealers.
Warehousing – Scope, Primary Functions

• Warehousing is the process of buying goods from a manufacturer and then

storing them in a warehouse before fulfilling the orders.
• The process of warehousing involves the organization and management of
any products before distribution.
• Businesses may store goods in a warehouse, storage facility or, in the case
of small businesses, in a home garage or basement.
 5 functions of warehousing

1. Streamlining the shipping process- Larger companies often place warehouses in strategic
locations to help with shipments.
2. Supporting the supply chain - Keeping the warehousing and production functions separate
optimizes the warehouse for the receipt and distribution of goods and materials.
3. Managing inventory - Having a good logistics plan in place is critical for shipping goods in
a timely manner and at a cost-effective price.
4. Enabling climate control- It can also help businesses extend the life of perishable products,
giving them a larger window in which to sell them.
5. Maintaining quality control- Inspecting raw materials at an inbound warehouse can prevent
nonconforming materials Inspecting outbound finished goods at a warehouse provides a final
check for quality defects.
 Efficient Warehouse Management
• Storage organization
• Labor management
• Cost-effectiveness
• Security
• Faster shipping
• Easy processing of returns
 Types of Warehouses
• Private warehouses: A private warehouse is when a business exclusively owns or rents a
warehouse space. Some businesses may choose to rent out any additional space they have to others.
• Public warehouses: A public warehouse is a place that businesses rent to store goods. State or
government departments or large corporations may own the warehouse and rent out the space to
other entities.
• Co-op warehouses: A co-op warehouse is a space that a cooperative owns and rents. They may
rent out different warehouse facilities to businesses that share the space.
• Distribution centers: A distribution center is a place that receives shipments and then moves them
to a new location. Larger companies often have numerous distribution centers in different locations.
 Warehouse Layout Design
The following areas must be perfectly defined when designing a layout:

A. Loading and unloading areas

B. Reception area
C. Storage area
D. Picking area
E. Dispatch area
Loading and unloading areas
Reception area
Storage area
Picking area
Dispatch area
 Warehouse Layout Criteria
• Budget Considerations
• Space Available
• Flow
• Accessibility
• Equipment
• Personnel
• Authority Guidelines
 Warehouse Management System
• A warehouse management system (WMS) consists of software and
processes that allow organizations to control and administer warehouse
operations from the time goods or materials enter a warehouse until they
move out.
• Warehouse managers are the primary users of a WMS, but it can be
integrated with enterprise resource planning (ERP), customer relationship
management (CRM), transportation management systems (TMS) and
inventory management.
 Designing the Distribution Network
Two major factors that deeply affect the distribution network design of any
supply chain are –
1. Meeting customer’s timely needs
2. Costs involved in meeting the customer’s needs
 Role of Distribution
• Distribution management manages the supply chain for a firm, from
vendors and suppliers to manufacturer to point of sale, including
packaging, inventory, warehousing, and logistics.
• Distribution management is part of the supply chain process that
ultimately delivers goods to end-users or consumers. Managing
distribution is essentially managing the movement of goods, whether it be
from a wholesaler to a retailer or from a retailer to a consumer.
 Factors influencing distribution
• Business location
• The location of the target market
• Reach target market
• Warehouse
• Transportation and logistic
 Design Options
Based on the firm’s industry and the answers to these two questions, one of six distinct
distribution network designs may be used to move products from factory to customer. These
designs are classified as follows:
1. Manufacturer storage with direct shipping
2. Manufacturer storage with direct shipping and in-transit merge
3. Distributor storage with carrier delivery
4. Distributor storage with last-mile delivery
5. Manufacturer/distributor storage with customer pickup
6. Retail storage with customer pickup
 Network design in supply chain
• Supply chain network design or SCM network design helps enterprises simulate and visualize their supply
chains to optimize them. Optimization of supply chains reduces overall costs and enhances service, speed-
to-market, flexibility and risk mitigation.
• The three levels of supply chain network design are the strategic level, tactical level and operational
level.
• The Strategic level involves the creation of long-term plans outlining the organization's overarching
objectives and goals falls within this level of supply chain management.
• Tactical planning entails creating detailed strategies to accomplish goals within the parameters of the
strategic plan. These plans could include identifying priorities, creating goals, and developing plans to
reach those goals.
• The Operational level is defined by putting the tactical strategies into effect to accomplish them. It focuses
on daily duties and specifies how these tasks should be completed to meet the goals of the business.
 Factors affecting the network design
decisions
• Strategic Factors
• Technological Factors
• Macroeconomic Factors
• Political Factors
• Infrastructure Factors
• Competitive Factors
• Customer Response Time
• Cost of Logistics and Facilities
 HUB & SPOKE vs Distributed
Warehouses
• The hub and spoke model provides a means of distribution that relies on a
central location (the hub) and a number of spokes leading out from that hub.
• Eg: The London airport, in this example, is the hub. The spokes would be
the routes the plane takes to get to London from New York.
• A distribution center is a facility where goods are processed, stored, and
shipped out to customers or retail stores. Amazon's Fulfillment Center is a
good example of a warehouse distribution center, as it handles everything
from order processing to shipping.
THANK YOU
Dr. Lasya Harshith
Surana College, Autonomous