Supply Chain

Management
 Supply Chain Management
• Definition:
Supply Chain Management is primarily concerned with
the efficient integration of suppliers, factories,
warehouses and stores so that merchandise is produced
and distributed in the right quantities, to the right
locations and at the right time, and so as to minimize
total system cost subject to satisfying customer service
requirements.
• Notice:
– Who is involved
– Cost and Service Level
– It is all about integration
 What is Supply Chain
Management?

Managing supply chain flows and assets,

to maximize profits and minimize

losses.
 Customers,
Field demand
Sources: Regional Warehouses: centers
plants Warehouses: stocking sinks
vendors stocking points
ports points

Supply

Inventory &
warehousing
costs
Production/
purchase Transportati
on Transportati
on
costs costs Inventory & costs
warehousing
costs
Decision Phases in Supply Chain
• Supply Chain
Strategy & Design
Strategy & Design
• Supply Chain
Planning Planning

• Supply Chain
Operations Operations
 Supply Chain Strategy & Design
• Location & capacity of production
and warehouses
• Products to manufactured and in
which locations
• Mode of transportation
• Types of information systems to be
used
• Strategic sourcing decisions
 Supply Chain Planning
• Markets to be supplied & from which
location
• Planned build-up of inventory
• Subcontracting of manufacturing
• Timing and size of market promotion
• Handling uncertainty in demand, foreign
exchange fluctuations
• Establishing production plan under fixed
strategic parameters
 Supply Chain Operations
• Decisions over individual customer
orders (daily, weekly)
• Less uncertainty about demand
information
• Exploit reduction of uncertainty to
optimize performance
• Establish deliver dates
• Establish order fill rate
Cycle View of Supply Chains
Customer
Customer Order Cycle

Retailer
Replenishment Cycle

Distributor

Manufacturing Cycle

Manufacturer
Procurement Cycle
Supplier
 Supply Chain Challenges
• Achieving Global Optimization
– Conflicting Objectives
– Complex network of facilities
– System Variations over time
 Supply Chain Challenges
• Achieving Global Optimization
– Conflicting Objectives
– Complex network of facilities
– System Variations over time
• Managing Uncertainty
– Matching Supply and Demand
– Demand is not the only source of
uncertainty
 Key Issues in Supply Chain
Management
• Distribution Network Configuration
• Inventory Control
• Supply contract
• Distribution Strategies
• Supply Chain Integration & Strategic
Partnering
• Outsourcing & Procurement Strategies
 Key Issues of SCM (cont)
• Product Design
• Information Technology & Decision
Support System
• Customer Value
 Prerequisites for Supply Chain
Management
• Top management understanding &
commitment
• Quest for excellence
• Effective and efficient communication
• Relationship instead of exchange
• Cross-functional teams
• Reality of team, partnerships & alliances
(based on harmony & trust)
 Drivers of Supply Chain
Performance
Efficiency Responsiveness

Supply chain structure

Inventory Transportation Facilities Information

Drivers
 Considerations for Supply Chain
Drivers
Driver Efficiency Responsiveness

Inventory Cost of holding Availability

Transportation Consolidation Speed

Facilities Consolidation / Proximity /

Dedicated Flexibility
Information What information is best suited for
each objective
 Achieving Strategic Fit
• Understanding the Customer
– Lot size
– Response time
– Service level Implied
– Product variety Demand
– Price Uncertainty
– Innovation
 The Value Chain: Linking Supply
Chain and Business Strategy
Business Strategy

New Product Marketing

Strategy Strategy
Supply Chain Strategy

New Marketing
Product and Operations Distribution Service
Development Sales

Finance, Accounting, Information Technology, Human Resources

 Flows in a Supply Chain
Information

Product
Customer
Funds
 Sequential Optimization vs.
Global Optimization
Sequential Optimization

Procurement Manufacturing Distribution Demand

Planning Planning Planning
Planning
Global Optimization

Supply Contracts/Collaboration/Information Systems and DSS

Procurement Manufacturing Distribution

Demand
Planning Planning Planning
Planning

Source: Duncan McFarlane

 The Dynamics of the Supply Chain
Order Size

Customer
Demand

Retailer
Retailer Orders
Orders
Distributor
Distributor Orders
Orders

Production
ProductionPlan
Plan

Time
Source: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998
 The Dynamics of the Supply Chain
Order Size

Customer
Demand

Production
ProductionPlan
Plan

Time
Source: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998
CASE STUDY OF DABBAWALLAHS
• What is NMTBSA?
(Nutan Mumbai Tiffin Box Suppliers Association)
• History : Started in 1880
• Charitable trust : Registered in 1956
• Avg. Literacy Rate : 8th Grade Schooling
• Total area coverage : 100 Kms
• Employee Strength : 5000
• Number of Tiffin's : 2,00,000 Tiffin Boxes
i.e 4,00,000 transactions every day.
• Six Sigma performance (99.999999)
• Technological Backup : Nil.
• Cost of service - Rs. 200/month ($
4.00/month)
• Standard price for all (Weight, Distance,
Space)
• Rs. 50 Cr. Turnover approx.
[200,000*200=400,000,00 p.m. i.e 48
crore p.a.]
• “No strike” record as each one a share
ORGANISATIONAL
STRUCTURE
 PRESIDENT

VICE PRESIDENT

GENERAL SECRETARY 13
MEMBERS

TREASURER

DIRECTORS(9)

•Acts as an supervisor,
MUKADAM(700) coordinator, the manager.
•Each Mukadam engages
5 to 6 people to work with
MEMBERS(5000) him.
Dabbawallah’s
• World record in best time management.

• Name in “GUINESS BOOK of World Records”.

• Registered with Ripley's “ believe it or not”.

 HOW DOES ITS
WORKING TAKES PLACE
CODING
VLP : Vile Parle
(Suburb in Mumbai)

9E12 : Code
for Dabbawallas at
Destination

E: Express Towers
(Bldg. Name)

121: Floor No.

EE : Code for
Dabbawallas at
Residential station.

33 : Code for Destination station

(E.g.. Nariman Point)
Flow logic of
distribution
 7 am – 9 am

• Begins the circuit.

• Collection of Dabbas from customer.
• In an hours time they collect 30 Dabbas
and pass them on to next leg of relay race.
• Next relay lap starts from local railway
station.
 9 am – 11.30 am
• Postman sorting at station.
• Wooden trays loaded in the compartment.
• Special reserved compartment in trains.
• Compartments contain 700-800 tiffins
besides human.
• Loaded and sorted at platform for area
wise distribution.
 11.30 am – 12 pm
Final relay of the race!!!
• Dozens of Dabba wala’s pour out from
trains at destination platforms during this
peak hour.
• crates are unloaded outside the stations.
• Dabbas are sorted within 10 minutes on
the footpath or on platform.
• Pack their carts and boxes and Dashed off
to office districts.
 12 pm – 2 pm
• Rush to the destination on 10 min sprint,
push handcarts or bicycle.
• Each one assigned one block of office.
• Rush with handcarts and deliver the
Dabba.
• Hour later the collection process starts
where dabbas are picked up from offices
where they had delivered.
“NO ONE IS ALLOWED TO UPSET THE
SYSTEM”
 2 pm – 6 pm
Here after the whole process is
reversed.
• By 3 pm they again board the train for
their respective locations.
• Empty Dabba’s are returned to
households.
• Flexible • Process capability
infrastructure • Transport economics
• Customer • Redundancy
Cooperation • Coordination
• Appropriate network • Compensation
structure
• Structure
• Codification system
• Topography
• They are already developing a software
application thorugh which the people of
Mumbai can order Dabba service online
through internet.
• To further enhance customer loyalty and
ease of communication, they have
adopted the mobile technology.
• This mobile technology is being provided
in association with Active Media
Technology.
KEEP LEARNING

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