Introduction - Supply Chain Management, Logistics Management Video Lecture | Logistics Management - B Com

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good afternoon friends we are going to
start our discussions on a very
important topic for managers of the day
that is supply chain analytics supply
chain analytics is a combination of data
analytics into the supply chain
management supply chain management we
all know is one of the most important
aspect of business nowadays we know some
of the popular names of Fortune 500
companies like Walmart Dell and
similarly 7-eleven etcetera from Japan
Alibaba
from China these companies are known
because of their supply chain competence
and nowadays it is believed that supply
chain is one such area in the
organization which can provide lot of
competitive advantage to a particular
organization if you go to the website of
Harvard publishing you will find maximum
cases in the area of supply chain
management and I come particularly from
the domain of operations management and
now many of us feel that supply chain
management which was once upon a time
considered to be a subset of operations
management and nowadays the situation is
almost reversed the supply chain has
become a umbrella term and operation
management has become a subset of supply
chain management
so therefore the course on supply chain
management and using the data analytics
technique into the supply chain
management so that name has come supply
chain analytics in the first lecture we
will have some kind of introduction of
supply chain that evolution of supply
chain over last hundred years then what
are the different important decision
phases in supply chain there are
different ways
which we can study the supply-chain
those process views we will see in our
discussion in first two lectures which
are the introductory lectures of this
course then we will also see what are
the importance of various types of flows
in the supply chain we will also see
some very important examples which make
supply chains so popular and then we
also see the strategic aspect of the
supply chain management and then we see
that how can we achieve that strategic
fit with respect to the supply chain
management and the competitive strategy
of the organization so in first two
lecture we will have a broad overview of
this subject and we will see that how
supply chain management has become the
use of data analytics and particularly
the present form of supply chain
management where most of the decisions
we are taking with the help of real-time
data so let us start with understanding
of what is supply chain now supply chain
has become such a common term that we
find so much mention of this term in
media reports we find the mention of
this term in parliamentary debates we
find the mention of this term in
day-to-day discussions also so many a
times we may wonder whether it is a
academic term or it is more a term of
media and reports but now we are going
through a formal course of supply chain
management and therefore we it will be
very relevant for us to understand the
real meaning of supply chain and what
does it mean and what are the meanings
of supply chain management further now
as we can see that supply chain involves
all the stages in the fulfillment of the
requirement of the customer and these
stages may include
factors suppliers transporters
warehouses retailers and customer
himself it is very important to
understand all the time and I will be
emphasizing all through this course that
customer is a very much integral part of
supply chain all the time please we need
to ensure that customer is always
considered whenever we are taking a
decision related to supply chain
whenever we are talking of supply chain
so customer is always an integral part
of supply chain many a time we feel that
up to retainer is our supply chain and
customer is not the part of supply chain
but now onwards once we are going
through this formal course
please remember that customer is always
a very integral part of supply chain the
role of supply chain is integration of
demand and supply this is very important
demand comes from the customer side and
supply come from all these people
manufacturer suppliers transporters
warehouses retailers they all help us in
fulfilling the demand of the customer so
proper integration of demand and supply
that is very much necessary for customer
satisfaction as well as for the
profitability of the service providers
so therefore the importance of this
subject is becoming more and more in the
coming competitive times and within each
company within each company the supply
chain includes all functions involving
product development marketing operations
distribution finance customer service
after sales services etc many of us may
feel that supply chain is a more related
to operations management but if we talk
in a very holistic manner nowadays it is
no longer a specific to operations
rather it is more holistic concept and
we require equal involvement
of product development the involvement
of marketing the involvement of
distribution the involvement of finance
and after-sales services in achieving
the objectives of supply chain
management because as I am saying that
it is integration of demand and supply
so the demand side information the
demand side data is normally captured by
the marketing people and on the basis of
that data that information the product
development team the operations team
they develop new products they ensure
the supply of those products to the
customers and then further wherever the
customer is ensuring the supply to that
very point to that very place is the
responsibility of distribution team so
it is very important that the scope of
supply chain management to be understood
in a wider perspective and just not
limited to the operation sky so
therefore therefore we will see in our
coming discussion that supply chain
management has all three verticals of
decision making it is deal at the
strategic level also it is deal at the
tactical level also and it is deal at
the execution level also because of
involvement of almost all the functions
it is very much similar when we talk of
integrated marketing when we talk of
total quality management or when we come
to this class of supply chain management
we talk of involvement of all functions
so this holistic city is very very
important in modern management concepts
and that is what we are trying to
emphasize as I mentioned that customer
is very much integral part of the supply
chain and the supply chain includes
movement of products from suppliers
those are here in the left side of the
supply chain to the manufacturer and to
distributor and also includes movement
of information ferns and products in
both the direction we will see these
things in a better pictorial manner in
our coming slides with increasing
competition it is a more appropriate
nowadays
to say that supply chain is now changing
into the form of a supply network or
supply wave because when we talk of a
chain it is linear like this but
actually it is no longer a linear system
you have many important players at each
of these locations and there may be a
crisscross at each of these stations and
therefore it is more appropriate to say
that supply chain is now becoming supply
network or supply wave let's see these
are some of the generic type of supply
chains where you can see that in a very
conventional type of normal supply chain
which we all know there is a
manufacturer manufacturer is producing
the goods these goods are coming to
wholesaler wholesaler is distributing to
large number of retailers in the market
and those products are coming to the
customer this is a very conventional
type of supply chain and we all have
used this type of supply chain but
nowadays you can also see you can also
understand that there are supply chains
where wholesalers are not there you have
large retail houses like Big Bazaar like
Reliance chains like Walmart's we're
probably wholesalers are not there and
manufacturer directly supplying these
products through the detainer and
retailer those big retailers are
directly supplying these products to the
and customers and then there are supply
chains where manufacturer is directly
distributing products to the customer
for example
BHEL take the example of BHEL BHEL is
the manufacturer and the customers are
State Electricity Board
so if DHL is making a turbine so there
is no wholesaler no retailer in between
and in that supply chain BHEL is
directly distributing those products to
the customers and customers so depending
upon your product to product depending
upon the nature the unit cost and so
many other factors you may have variety
of supply chain these are some of the
generic type of supply chain and the
suitability of this supply chain depends
upon the type of products the type of
customers the type of intermediaries you
require but as I told you that these are
very linear kind of arrangements these
three which I have shown here these are
very linear kind of arrangements but
actually it is not so actually the
situation is like this where you have
manufacturer but many wholesalers many
retailers are there and these
wholesalers and retailers are making a
network kind of situation so these are
chains but what I have drawn on the
board this is more like a network so
this is supply chain network so in the
present environment in the present
environment we say that supply chain
network is more appropriate than simply
supply chain and one more thing which I
would like to emphasize in the beginning
that nowadays the competition is not
between one organization to another
organization it is not correct to say
that Maruti in India is competing with
Tata Motors rather it is more
appropriate to say that supply chain of
Maruti is
competing with supply chain of Tata
Motors so well supply chain competes
with another supply chain and therefore
for the success of the organization for
the success of the organization it is
very important that we develop the
competence of entire supply chain it is
not the competence of a single
organization if apple is competing with
samsung so it is not the apple and
samsung directly but it is the result of
entire supply chain of Apple which is
competing with the entire supply chain
of samsung because lot of wholesalers
retailers and there are large number of
players on the left-hand side of these
manufacturers also so in our coming
slide we will go to those also and then
only then only this competition is
taking place between one supply chain
and another supply chain so these are
some generic supply chains but as we go
ahead in this course we will see more
specific supply chains also know coming
to a very specific example of a supply
chain where some customer is going to
purchase some detergent at a Big Bazaar
mall supermarket and let us see how
things are happening in this real supply
chain
those were the generic supply chains in
the previous slide now this is an
example of a real supply chain know in
this particular case you see customer is
coming to the Big Bazaar
to purchase the detergent and Big Bazaar
is keeping that detergent now how many
different parties are involved in this
entire process Big Bazaar is procuring
the detergent from the Procter & Gamble
no Proctor and nimble is manufacturing
the detergent or any other manufacturer
which is manufacturing the detergent
it requires plastic producer
it requires packaging it requires
chemical manufacturer and they also like
plastic producer is further requiring
the supplier like chemical manufacturer
to get the plastic granules this
packaging supplier this requires timber
industry and paper manufacturer paper
manufacturer is the supplier to the
packaging industry and paper industry
requires the timber industry and then
again this chemical manufacturer which
is required for making the detergent so
now you see to get a product like
detergent from the Big Bazaar and which
is manufactured by some manufacturer
like PNG and some one like that you have
even timber industry in that supply
detail for a normal customer for a
normal customer it is very difficult to
realize that the detergent which I am
purchasing from a big Bazaar mall is
actually originating the supply chain
from the timber manufacturer or timber
industry but when you see in a very
holistic manner you will find that this
entire supply chain is there and now
because of you can say limitation
because our interest is not that much
you can further find that there may be
few suppliers before this chemical
manufacturer also there may be few other
suppliers before this paper manufacturer
also I have only listed the timber
industry here but there may be some
other suppliers also before this paper
manufacturer so just to give you an idea
that how real supply chain
a supplied Network looks like so you
don't have only single supplier here
rather you have a variety of suppliers
supplying different types of components
differ no type in different types of raw
materials to Procter & Gamble and then
it is going to make the final product
and finally you get a packet of
detergent at the big major mall so this
way this looks very simple but there are
so many individuals to whom we need to
manage and therefore this management can
provide a very important competitiveness
to the organization going further this
slide is very very important to
understand that normally we feel or we
normally in our day-to-day discussion
are more concerned about the flow of
product in the supply chain but actually
as I told you in the beginning the
second slide that in a supply chain we
are actually having the flow of three
important elements and these three
important elements are information
product and firts you can see the arrows
in both the direction in this slide just
to tell you normally the primary thing
which flows in the supply chain that is
product and product flows from the
manufacturer side to the customer side
product flows from the manufacturer side
to the customer side but nowadays
because of environmental issues and
because of so many other cost related
issues lot of products also flow in the
reverse direction also and therefore we
have arrows with respect to product in
both the directions you have example of
LPG cylinders so filled LPG cylinders
flow from the manufacturer to the
but empty cylinders flow from the
customer to the manufacturer for
refilling you have glass bottles of
Pepsi coke the filled in bottles flow
from manufacturer to the customer but
the empty bottles flow from the customer
to the manufacturer side so and in
pharma in FMCG and in variety of these
organizations you have expired products
also so expired products flow from the
customer side to the manufacturer side
for proper disposal information is also
very important information related to
product availability flows from
manufacturer side to the customer side
but information related to what types of
products are required in how much
quantity these products are required
that type of information flows from the
customer side to manufacturer side so
that accordingly new products can be
developed accordingly designs can be
changed accordingly quantities can be
adjusted for all those things this
information flows in both the direction
funds that is the third important flow
which is there in the supply chain
normally the flow of funds the source of
that is the customer customer is the
only positive source of cash flow or
front flow in this supply chain but when
we talk of reverse logistics when we
talk of products going from the customer
side to the manufacturer side in that
case the funds may flow from that side
left side to the right side also so
therefore the arrows in all three cases
information product and funds are in
both these direction but one thing is
very important flow of information
is independent flow of information is
independent while flow of product and
funds are related the direction of flow
of products and funds is always opposite
to each other if products are flowing
left to right
so in that case funds will flow right to
left and if products are flowing right
to left in that case funds will flow
left to right so these radicals are
restricted directions and the flow of
information is independent it can flow
independently in both the direction so
that is about three important flows in
supply chain normally normally most of
our cost related diseases are linked
with the flow of products that how the
flow of product is taking place in your
supply chain but at the same time when
we are talking of supply chain analytics
the flow of information is equally
important because nowadays we are moving
for real-time decision-making of supply
chain and for that purpose the efficient
flow of information efficient flow of
data is very very important in this
particular case so that our
decision-making becomes more efficient
more useful helping the supply chain and
helping ultimately the objectives of the
organization now let us see what are the
objectives typical objectives of a
modern-day supply chain so modern-day
supply chain the objectives are to
maximize the value which we are creating
in the supply chain the supply chain
value is actually the difference between
what the final product which we are
offering to customer is worth and the
customer is giving how much for that and
this value we can directly relate
with the profitability of the supply
chain and just to give you the idea of
the process of this value in the supply
chain this slide is very helpful for us
where you see now in this case you have
three entities to the left side of the
manufacturer and these are vendors these
are suppliers to the manufacturer which
we call them tier 1 supplier tier 2
supplier tier 3 suppliers they are
supplying raw materials they are
supplying components they are supplying
parts of assemblies etc to the
manufacturer and most of the value
addition from this right till the
manufacturer finishes the final product
is because of processing and the
manufacturing activities you are doing
lot of processing you are doing painting
you are fabrication and all these things
are happening so incremental value
addition is taking place because of all
these activities once product leaves the
manufacturer and it reaches wholesaler
retainer and to the customer the value
addition is taking place in these phases
also but here the value addition is
because of marketing and logistics
activities so we need to see that
finally when the product is reaches in
the hand of the customers so what is the
value the product has acquired
and how much customer is paying for that
value and we want to actually maximize
this difference so that that difference
is actually the profitability of the
organization so it is very very
important to understand that we need to
do value addition but for that value
addition how much customer is ready to
pay if you do excess value addition and
for which it is difficult to get money
out of the customers pocket then your
profitability will be certainly under
the question mark so you need to see
that you don't waste your resources in
those things where you do not
significant value and therefore the
concepts will help us in achieving that
objective for an example this slide
gives you that if I purchase a mobile
phone of micro maths at the price of
rupees 10,000 and the supply chain this
is the revenue of the supply chain when
I am paying 10,000 rupees for purchase
of a Micromax mobile so if I am paying
10,000 rupees so this is revenue of the
supply chain and supply chain incurs
cost in getting the information storage
transportation the components the
assembly etcetera so all that is the
cost of supply chain now the difference
between this 10,000 rupees and the sum
of all these cost is the profit of the
supply chain and throughout this course
we are actually targeting to maximize
this supply chain profit so the supply
chain profitability is total profit to
be shared across all stages of the
supply chain now it is also very
important to understand that when we are
talking of supply chain so we are
talking of total profit and that total
profit is shared among all these supply
chain partners all these stages so I am
NOT talking of profit of an individual
stage or individual member of the supply
chain so supply chain success should be
measured by total supply chain
profitability and not profit of an
individual stage and as soon as we start
off individual stage the very objective
of supply chain the very objective of
working together is defeated and then
the purpose of the competing with supply
chain competing with supply network will
be lost so all the time we need to keep
this in mind and later on with the help
of some data and some crime of modeling
exercises we will see that how this a
supply chain profit which we are talking
in totality is always more than we talk
of profit at the individual stage so it
is not a
like a preaching statement it is it can
be proved with the help of some kind of
quantitative data also now we also need
to see the evolution of supply chain
over last hundred years and we will use
our part two of the lecture to discuss
the evolution of supply chain management
so at the time we are just stopping here
to discuss that what is the supply chain
and how we need to do business in a
supply chain environment with the help
of coordination with the help of all
entities working together and not to
think for individual supply chain
individual gains or individual profits
it is a business with the help of
coordination with the help of
cooperation of all the members of supply
chain and therefore the success of
supply chain lies in the coordination
supply chain success lies in trusting
each other and these are the
fundamentals of supply chain management
thank you very much
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