Class 1

Supply Chain Management Notes (Suhas Rane)

Prepared By: Sudhanshu Chaudhary

ranesuhas@hotmail.com

Class 1

Purpose of Business: To create wealth (Adam Smith). Customer should perceive value of the product (offer to needy – Customer targeting)

6 basic functions of a business

1) Creation – Idea generation / Product selection. Example: Tata Airlines from JRD Tata group going to Karachi

2) Finance – Managing resources, capital acquisition and financial record keeping

3) Personnel – HR, labor relations

4) Purchasing – Buying of required resources. Resources include equipment (form of capital goods like laptop, office equipment, Xerox, courier) + Material (Revenue generator) + Services

(Production + Services = Operations)

5) Conversion (Operations) – Changing raw materials to economic goods (Raw form converted to economic form)

6) Distribution – Selling and marketing (reaching the customer)

Operations Management – Effective & efficient management of process (A Process has an input and a value added output, the objective is to add value)

Transformational process

1) Physical – Manufacturing operations

2) Locational – Transport operations

3) Exchange – From wholesale to retail operations

4) Physiological – As in health care

5) Psychological – As in entertainment, movies, TV serials

6) Informational – As in communication, education

In a college, students are products, prospective employers are customers, college administration / prof are operation manager

Crafts Production – Dilip Chabaria car, MF Hussain painting, village potterman. Customized, exclusive, unit cost of production is very high (Fixed cost is spread over small quantity)

Mass Production – Standardized, less lead time, low unit cost of production (fixed cost is spread over large quantity)

Mass customization – McDonalds, Ikea, Dell, Toyota, McDonalds, Titan. Components are standard, finished product is customized (different for different customers). Postponment is the strategy used for mass customization.

Lean Management (Slim) – Quick process, less installation time / change-over time. Remove set-up time. 1950s (Change the die within 1-10 min

Today’s Mantra of quality process

1) Quality is determined by customer

2) Quality control is over entire process (TQM)

3) Price is what customer is willing to pay (Target Pricing)

4) Marketing is everyone’s responsibility from Chairman to shop floor worker

5) Focus on what’s good for the customer (earlier it was what’s good for the company)

6) Have single supplier with good reliability (Rich Dad, Poor Dad)

7) Information Technology has made it possible to track supply chain

8) Department is supreme

9) Old approach was functional (no interaction of data with department), New approach is integrated approach which looks at entire supply chain

Supply chain encompasses all activities associated with flow and transformation of materials and information from the raw material stage through to the end user. Main aim is to supply end consumer by plugging all losses and give best value to end user.

Coverage of supply chain

1) Production, planning and control

2) MRP (Material Requirement planning, Manufacturing resource planning)

3) Purchase and procurement

4) Vendor development

5) Inventory and storage

6) Warehousing and logistics

7) Outsource services