Supply Chain Management-Teaching Notes

FOR MBA/BBA

Dr. S.V.Bakhtiyari
Principal
Presidency school of management and computer
sciences Hyderabad -India
[email protected]

4/13/2022 Dr. Bakhtiyari 1

 Learning outcomes
• The Course is aimed at understanding the role
of supply chain in enhancing organizational
efficiency and delivering customer value
• To understand the various drivers of a
successful supply chain strategy and structure
are also addressed in the programme.
• To highlight the significance of lean, green and
agile supply chain management

4/13/2022 Dr. Bakhtiyari 2

 Syllabus Outline
• Unit - I: Introduction to supply chain
Management
• Unit - II: Supply Chain Structure and Inventory
in SC
• Unit - III: Role of Transportation in Supply
Chain
• Unit - IV: Information Technology in SCM
• Unit - V: Key Operation Aspects in Supply
Chain
4/13/2022 Dr. Bakhtiyari 3
 Supply Chain Management
Supply chain management is the management of
the flow of goods and services and includes all
processes that transform raw materials into final
products. It involves the active streamlining of a
business's supply-side activities to maximize
customer value and gain a competitive advantage in
the marketplace
4/13/2022 Dr. Bakhtiyari 4
 Cont…
• SCM encompasses the integrated planning and
execution of processes required to optimize the
flow of materials, information and capital in
functions that broadly include demand planning,
sourcing, production, inventory
management and logistics -- or storage and
transportation. Companies use both business
strategy and specialized software in these
endeavours to create a competitive advantage.

4/13/2022 Dr. Bakhtiyari 5

 The 5 essential stages in developing a
successful supply chain
• Stage 1: Plan. Planning involves a wide range
of activities
• Stage 2: Source. This aspect of supply chain
management involves organizing the
procurement of raw materials and
components
• Stage 3: Make
• Stage 4: Deliver
• Stage 5: Return
4/13/2022 Dr. Bakhtiyari 6
4/13/2022 Dr. Bakhtiyari 7
4/13/2022 Dr. Bakhtiyari 8
 SCM-Framework

4/13/2022 Dr. Bakhtiyari 9

 Supply chain strategy
• Supply chain strategy is an iterative process that
evaluates the cost- benefit trade-offs among
operational components it also involves
leveraging the core competencies of the
organization to deliver value to the ultimate
customer, the supply chain strategy is a
combination of policies, processes, and
procedures that should be followed to ensure
delivery of the final product from point of
manufacturer to customer
4/13/2022 Dr. Bakhtiyari 10
 SCM - Strategy
• The SCM strategy is consist of various
components like
• product flow, financial flow, information flow
• value flow & , risk flow
• Scheduling the logistics process
• Shipment planning
• Financial management
• Regulatory compliance
• Customer service
4/13/2022 Dr. Bakhtiyari 11
• Inventory Management – Demand and Supply
Planning
• Packaging Strategy
• Warehouse management
• Supply Chain Safety and Security
• Distribution and transportation

4/13/2022 Dr. Bakhtiyari 12

 Global supply chain
• A global supply chain is a dynamic worldwide
network when a company purchases or uses
goods or services from overseas. It involves
people, information, processes and resources
involved in the production, handling and
distribution of materials and finished products
or providing a service to the customer.

4/13/2022 Dr. Bakhtiyari 13

4/13/2022 Dr. Bakhtiyari 14
4/13/2022 Dr. Bakhtiyari 15
4/13/2022 Dr. Bakhtiyari 16
4/13/2022 Dr. Bakhtiyari 17
 Value chain
• Value chain refers to the functional activities of a
business that add value to its customers. The
concept was created around 1985 by Michael
Porter
• It consists of primary activities and support
activities, all of which add value to the products
or services offered by the business
• When managing the value chain system, the idea
is to optimize the chain so as to maximize value
while minimizing cost.
4/13/2022 Dr. Bakhtiyari 18
4/13/2022 Dr. Bakhtiyari 19
 Bullwhip effect
• The bullwhip effect is a distribution channel
phenomenon in which forecasts yield supply
chain inefficiencies. It refers to increasing
swings in inventory in response to shifts in
customer demand as one moves further up the
supply chain
• Distortion in the data pertaining to the degree
of demand as it moves from one to other stage
In the supply china management

4/13/2022 Dr. Bakhtiyari 20

• The bullwhip effect on the supply chain occurs
when changes in consumer demand causes the
companies in a supply chain to order more goods
to meet the new demand. The bullwhip effect
usually flows up the supply chain, starting with
the retailer, wholesaler, distributor, manufacturer
and then the raw materials supplier.
• factors contribute to the bullwhip effect are : lack
of communication and coordination, batch
ordering, price fluctuations, overreaction to
backorders, errors in forecasting, inflated orders,
and product promotions.
4/13/2022 Dr. Bakhtiyari 21
 Reducing the Bullwhip Effect
• Collaborate with customers and suppliers.
Another strategy to improve supply chain
effectivity is through better collaboration with
customers and suppliers. ...
• Improve forecast accuracy. ...
• Enable fast decisions with visibility and insight.
• Adopt a demand driven supply chain
management approach.

4/13/2022 Dr. Bakhtiyari 22

 AGGREGATE PLANNING

4/13/2022 Dr. Bakhtiyari 23

 Aggregate planning is the process of developing, analyzing,
and maintaining a preliminary, approximate schedule of the
overall operations of an organization. The aggregate plan
generally contains targeted sales forecasts, production levels,
inventory levels, and customer backlogs. This schedule is
intended to satisfy the demand forecast at a minimum cost.

4/13/2022 Dr. Bakhtiyari 24

 Defined as …
• Aggregate planning involves translating long-term
forecasted demand into specific production rates and the
corresponding labor requirements for the intermediate term.

Production rates
Long term Aggragate
demand planning
Labour
4/13/2022 Dr. Bakhtiyari requirements 25
 objectives
• Minimize cost / maximize profits
• Maximize customer service
• Minimize inventory investment
• Minimize changes in production rates
• Minimize changes in workforce levels
• Maximize utilization of plant and
equipment
4/13/2022 Dr. Bakhtiyari 26
 Aggregate planning process

- Determine demand for each period .

- Determine capacities for each period .
- Identify policies that are pertinent .
- Determine units costs for units produced .
- Develop alternative plans and compute costs for each.
- Select the best plan that satisfies objectives .

4/13/2022 Dr. Bakhtiyari 27

• Demand planning is a multi-step operational
supply chain management SCM process used
to create reliable forecasts. Effective demand
planning can guide users to improve the
accuracy of revenue forecasts, align inventory
levels with peaks and troughs in demand, and
enhance profitability for a given channel or
product.

4/13/2022 Dr. Bakhtiyari 28

 Forecasting
• The use of historic data to determine the
direction of future trends. Forecasting is used
by companies to determine how to allocate
their budgets for an upcoming period of time.
This is typically based on demand for the
goods and services it offers, compared to the
cost of producing them. Forecasting also
provides an important benchmark for firms
which have a long-term perspective of
operations.
4/13/2022 Dr. Bakhtiyari 29
 Managing Predictable Variability
• Predictable variability is change in demand
that can be forecasted Can cause increased
costs and decreased responsiveness in the
supply chain A firm can handle predictable
variability using two broad approaches:
• Manage supply : using capacity,
inventory, subcontracting, and backlogs
• Manage demand : using short-term price
discounts and trade promotions
•
4/13/2022 Dr. Bakhtiyari 30
 II-Unit

4/13/2022 Dr. Bakhtiyari 31

 Reverse Supply Chain
• The process of moving goods from their typical
final destination for the purpose of capturing
value, or proper disposal. Remanufacturing and
refurbishing
• It is “the process of planning, implementing, and
controlling the efficient, cost effective flow of
raw materials, in-process inventory, finished
goods and related information from the point of
consumption to the point of origin for the
purpose of recapturing value or proper disposal.
4/13/2022 Dr. Bakhtiyari 32
• reverse logistics manages the reverse movement
of goods, in other words returns management
within supply chain function. Examples
• Return to suppliers
• Resell
• Refurbish/Recondition
• Remanufacture
• Recall
• Recycle

4/13/2022 Dr. Bakhtiyari 33

4/13/2022 Dr. Bakhtiyari 34
 SCOR –Model
• The supply chain operations reference model
(SCOR) is a management tool used to address,
improve, and communicate supply chain
management decisions within a company and
with suppliers and customers of a company
(1). The model describes the business
processes required to satisfy a customer's
demands

4/13/2022 Dr. Bakhtiyari 35

 SCOR is based on six factors
• Plan – Processes that balance aggregate
demand and supply.
• Source – Processes that procure goods and
services
• Make – Processes that transform product to a
finished state
• Deliver – Processes that provide finished
goods and services

4/13/2022 Dr. Bakhtiyari 36

• Return – Processes associated with returning
or receiving returned products for any reason.
These processes extend into post-delivery
customer support.
• Enable – Processes being associated with the
management of the supply chain. These
processes include management of: business
rules, performance, data, resources, facilities,
contracts, supply chain network management

4/13/2022 Dr. Bakhtiyari 37

 Unit - III

4/13/2022 Dr. Bakhtiyari 38

 Strategic Alliance

Strategic alliances are agreements

between companies (partners) to reach
objectives of a common interest. Alliances
are among the various options which
companies can use to achieve their goals.
They are based on cooperation between
companies.

4/13/2022 Dr. Bakhtiyari 39

 Purposes of Strategic Alliances
• Competition is shifting from a "firm versus firm perspective"
to a "supply chain versus supply chain perspective."
Therefore, firms seeking competitive advantage are
participating in cooperative supply chain arrangements, such
as strategic alliances, which combine their individual strengths
& unique resources.

• Enabling a firm to focus resources on its core skills &

competencies while acquiring other components or
capabilities it lacks from the marketplace.

• Alliances can often improve market power of a firm because

either the alliance partner is a customer for the product or
because the distribution channels & buying power of the
partners can be combined

4/13/2022 Dr. Bakhtiyari 40

 Purposes of Strategic Alliances cont’d

• Alliances enable buying & supplying firms to combine their

individual strengths & work together to reduce non-value-
adding activities & facilitate improved performance.

• In order for both parties to remain committed to this form of

relationship, mutual benefit must exist (i.e. a "win-win"
relationship)

4/13/2022 Dr. Bakhtiyari 41

 Success Factors
• Selection:

– Strategically evaluate which upstream & downstream members

should be included in the supply chain to create a highly
competitive & efficient supply network.
– Selecting strategic partner should be based on company’s goals,
objectives & values system.
– Select partners who have competencies in collaboration & those
who already have a proven ability to work in a collaborative
environment.

• Intention:

Both partners should acknowledge their mutual dependence &

their willingness to work for the survival & prosperity of the
relationship.

4/13/2022 Dr. Bakhtiyari 42

 Success Factors cont’d
• Trust:

– Existence of trust in a relationship reduces perception of risk

associated with opportunistic behavior as this generates greater
profits & serve customers better

• Communication:

– Communication is critical for building successful relationships to

achieve the benefits of collaboration as it allows partners to
understand alliance goals, roles, responsibilities & helps with the
sharing & dissemination of individual experiences

• Conflict Resolution:

– Firms should be motivated to engage in joint problem solving as they

are, by definition, linked together to manage an environment that
was more uncertain & turbulent than each one could control.

4/13/2022 Dr. Bakhtiyari 43

 Success Factors cont’d
• Developing a focused winning strategy for the alliance:

– Based on distinctive competencies and competitive advantages of the partners

in the selected target market (s).
– To ensure there will not be a goal divergence or conflict between alliance
partners.
– To be able to manage the company cultural challenges that may arise between
the alliance partners.

• Partners should be in vulnerable strategic positions:

– (i.e., in need of resources) or when they are in strong social positions (i.e.,
possess valuable resources to share). seeking complementary or similar
resources for transferring or pooling.

• Progressive learning & value capturing:

– Learning involves significant transfer of tacit, specialized & complex knowledge.

Learning requires close collaboration of both firms to overcome transfer
challenges as knowledge, values, culture and organizational forms.
4/13/2022 Dr. Bakhtiyari 44
 Success Factors cont’d
• Respect and protect the brand of each partner.

• Determine and align decision rights:

– To define what decisions are important to the alliance, which partner

should make them and how the decisions will be made and monitored.

• Exit Strategy:

– Agree upon an exit strategy for the alliance. It Is important to have

agreement in advance on how the alliance will be concluded if and
when it may fail and/or when it has fulfilled its mission and achieved its
goals and objectives

4/13/2022 Dr. Bakhtiyari 45

 Mistakes Leading to Failure

• Alliance business is viewed internally by one

partner.
• One of the partners is too dependant on the
other’s capabilities.
• Problems and dilemmas of mistrust.
• Cultural & language barriers.
• Collaboration in competitively sensitive areas
can be difficult.
• A clash of egos might occur.
4/13/2022 Dr. Bakhtiyari 46
 Types of Strategic Alliances
• Joint Venture: an agreement by two or more parties to form
a single entity to undertake a certain project. Each of the
businesses has an equity stake in the individual business and
share revenues, expenses & profits.

• Outsourcing

• Global Strategic Alliances: working partnerships between

companies (often more than 2) across national boundaries &
increasingly across industries. Sometimes formed between
company & a foreign government, or among companies &
governments

4/13/2022 Dr. Bakhtiyari 47

 Types of Strategic Alliances cont’d

• Equity strategic alliance: an alliance in which 2 or

more firms own different percentages of the
company they have formed by combining some of
their resources & capabilities to create a competitive
advantage.

• Non- equity strategic alliance: an alliance in which 2

or more firms develop a contractual-relationship to
share some of their unique resources & capabilities
to create a competitive advantage.

4/13/2022 Dr. Bakhtiyari 48

 Types of Strategic Alliances cont’d

• Distributors: Recruiingt distributors, where each one has its own geographical
area or type of product. This ensures that each distributor’s success can be
easily measured against other distributors.

• Distribution Relationships: This is perhaps the most common form of alliance.

Strategic alliances are usually formed because the businesses involved want
more customers. The result is that cross-promotion agreements are
established.

• Product Licensing: This is similar to technology licensing except that the

license provided is only to manufacture and sell a certain product. Usually
each licensee will be given an exclusive geographic area to which they can sell
to. It’s a lower-risk way of expanding the reach of your product compared to
building your manufacturing base and distribution reach.

4/13/2022 Dr. Bakhtiyari 49

 Public Private Partnership

A public-private partnership is a
contractual agreement formed
between public and private sector
partners, which allows more private
sector participation than is traditional.

4/13/2022 Dr. Bakhtiyari 50

 Another Definition

A public-private partnership exists

when public sector agencies (federal,
state, or local) join with private sector
entities (companies, foundations,
academic institutions or citizens) and
enter into a business relationship to
attain a commonly shared goal that
also achieves objectives of the
individual partners.
4/13/2022 Dr. Bakhtiyari 51
 Typical Uses
Contracting with a private company to:
–Renovate
–Construct
–Operate
–Maintain
–And/or Manage
A facility or system

4/13/2022 Dr. Bakhtiyari 52

 Benefits

• Expedited project completion

• Project cost savings
• Improved quality
• Use of private resources
• Access to new sources of private
capital

4/13/2022 Dr. Bakhtiyari 53

 Basic Dimensions of P3
Shared goals
–Shared resources (time, money,
expertise, people)
–Shared risks
–Shared benefits

4/13/2022 Dr. Bakhtiyari 54

PPP-P
1. Genesis

2. Feasibility

3. Plan & Test

4. Procure

5. Implement
6. Operations

4/13/2022 Dr. Bakhtiyari 55

 BENCHMARKING

For Best Practices

4/13/2022 Dr. Bakhtiyari 56

 What is Benchmarking
• A method for identifying and importing best
practices in order to improve performance
• The process of learning, adapting, and measuring
outstanding practices and processes from any
organization to improve performance

4/13/2022 Dr. Bakhtiyari 57

 Why Benchmark
• Identify opportunities to improve performance
• Learn from others’ experiences
• Set realistic but ambitious targets
• Uncover strengths in one’s own organization
• Better prioritize and allocate resources

4/13/2022 Dr. Bakhtiyari 58

 Types of Benchmarking: 1
• Strategic Benchmarking

How public, private, and nonprofit organizations

compare with each other. It moves across
industries and cities to determine what are the
best strategic outcomes.

4/13/2022 Dr. Bakhtiyari 59

 Types of Benchmarking: 2

• Performance Benchmarking

How public, private, and nonprofit

organizations compare themselves with each
other in terms of product and service. It
focuses on elements of cost, technical
quality, service features, speed, reliability,
and other performance comparisons.

4/13/2022 Dr. Bakhtiyari 60

 Types of Benchmarking: 3

• Process Benchmarking

How public, private, and nonprofit

organizations compare through the
identification of the most effective operating
practices from many organizations that
perform similar work processes.

4/13/2022 Dr. Bakhtiyari 61

 Benchmarking Process

Planning

Improving Collecting
Practices Data

Analysis

4/13/2022 Dr. Bakhtiyari 62

WAREHOUSING
OR
STOCK KEEPING UNIT

4/13/2022 Dr. Bakhtiyari 63

• Part of firms logistics system that stores products at and
between point of origin and point of consumption.

• Term “Warehousing” is referred as transportation at zero

miles per hour

• Warehousing provides time and place utility for raw

materials, industrial goods, and finished products,
allowing firms to use customer service as a dynamic
value-adding competitive tool.

4/13/2022 Dr. Bakhtiyari 64

 THE ROLE OF THE WAREHOUSE IN THE LOGISTICS SYSTEM

• The warehouse is where the supply chain holds or

stores goods.
• Functions of warehousing include
– Transportation consolidation
– Product mixing
– Docking
– Service
– Protection against contingencies

4/13/2022 Dr. Bakhtiyari 65

 TYPE OF WAREHOUSING
• Public Warehousing

• Private Warehousing

• Contract Warehousing

• Multi-client Warehousing

4/13/2022 Dr. Bakhtiyari 66

 PRINCIPLES OF WAREHOUSE LAYOUT DESIGN

Use one-story facilities

Move goods in a straight line

Use efficient materials-handling

equipment

Use an effective storage plan

Minimize aisle space

Use maximum height of the building

4/13/2022 Dr. Bakhtiyari 67
 OBJECTIVES OF EFFICIENT WAREHOUSE OPERATIONS
• Provide timely customer service.
• Keep track of items so they can be found readily &
correctly.
• Minimize the total physical effort & thus the cost of
moving goods into & out of storage.
• Provide communication links with customers

4/13/2022 Dr. Bakhtiyari 68

• Benefits of Warehouse Management
– Provide a place to store & protect inventory
– Reduce transportation costs
– Improve customer service levels
• Complexity of warehouse operation depends on the number
of SKUs handled & the number of orders received & filled.

• Most activity in a warehouse is material handling.

4/13/2022 Dr. Bakhtiyari 69

 COSTS OF OPERATING A WAREHOUSE
• Capital costs
— Costs of space & materials handling equipment
• Operating costs
— Cost of labor
— Measure of labor productivity is the number of
units that an operator can move in a day

4/13/2022 Dr. Bakhtiyari 70

 WAREHOUSE ACTIVITIES
• Receive goods
• Identify the goods
• Dispatch goods to storage
• Hold goods
• Pick goods
• Marshal shipment
• Dispatch shipment
• Operate an information
system
4/13/2022 Dr. Bakhtiyari 71
 Materials Handling

Materials handling is
the art and science of moving,
packing and storing of
substances in any form.

4/13/2022 Dr. Bakhtiyari 72

 Objectives of Materials Handling

➢ To Lowers unit materials handling cost

➢ To reduce manufacturing cycle time
➢ To provide better control of the flow of
materials
➢ To provide better working conditions
➢ To provide Contribution for better quality by
avoiding damages to products
➢ To Increase storage capacity
➢ To provide higher productivity at lower
manufacturing costs

4/13/2022 Dr. Bakhtiyari 73

 Material Handling Principles
• Material should be moved as little as possible
• Reduction in time by using shortest routers and
mechanical material handling equipment
• The material movement should be in lots rather
than in individual units
• Design of material handling equipment should be
such that it can increase the effectiveness
• Gravity should be used
• Rehandling and back tracking of materials should
be avoided
• Periodically Repairing ,Maintaince & Checkup of
existing material handling equipments

4/13/2022 Dr. Bakhtiyari 74

 Factors affecting the
Selection of
Materials Handling
Equipment

Capabilities of
Production Human element the handling
problem involved equipment
available

4/13/2022 Dr. Bakhtiyari 75

 Volume of
Production to be
maintained

Production Layout of plant &

Problem building facilities

Class of
materials to be
handled
4/13/2022 Dr. Bakhtiyari 76
 Adaptability
Flexibility
Speed

Load
capacity

Space
Equipments requirements

Factors
Power

Supervision
required

Ease of
Maintaince
Cost Environment

4/13/2022 Dr. Bakhtiyari 77

 Types of Material Handling Systems

1. Equipments oriented systems :-

a) Convey or Systems
b) Tractor transfer system
c) Fork lift truck
d) Industrial truck system
e) Underground system
2. Material Oriented Systems
a) Unit handling system
b) Bulk handling system
c) Liquid handling system

4/13/2022 Dr. Bakhtiyari 78

3. Methods oriented system
a) Manual systems
b) Automated systems
c) Job shop handling system
d) Mass production system
4. Function oriented system
a) Transportation systems
b) Conveying systems
c) Transferring systems
d) Elevating systems

4/13/2022 Dr. Bakhtiyari 79

 Types of Materials Handling Equipment

1. Conveyers
2. Cranes, Elevators and Hoists
3. Industrial Trucks
4. Auxiliary Equipments

4/13/2022 Dr. Bakhtiyari 80

 Unit-IV

4/13/2022 Dr. Bakhtiyari 81

 Network Design
in the Supply Chain

4/13/2022 Dr. Bakhtiyari 82

 Network Design Decisions
• Facility role: What role should each facility play? What
processes should be performed at each facility?

• Facility location: Where should facilities be located?

• Capacity allocation: How much capacity should be allocated to

each facility?

• Market and supply allocation: What markets should each

facility serve? Which supply sources should feed each facility?

• (How many plants, DC’s, retail stores, etc. to build?)

4/13/2022 Dr. Bakhtiyari 83
 Phase I: Strategy Considerations
• Understand where is the main emphasis:
– Cost leadership
– Responsiveness
– Product differentiation
• Who are the key competitors at each target market?
• Identify constraints on available capital
• Key mechanisms that will support growth
– Reuse of existing facilities
– Build new facilities
– Partner with other companies (mergers and acquisitions are potential
options here)

4/13/2022 Dr. Bakhtiyari 84

 Phase II: Regional facility
configuration
• Important Factors:
• Regional demand
• Production technologies and economies of
scale and scope
• Tariffs and Tax incentives
• Infrastructure factors
• Political, exchange rate and demand risk
• Competitive Environment
4/13/2022 Dr. Bakhtiyari 85
 Infrastructure factors
• Availability of skilled labor
• Availability of transportation facilities
– Ports
– Airports
– Rail
– Highways
• Availability of necessary utilities
– Power
– Water
– Sewage
– Telecommunications / IT

4/13/2022 Dr. Bakhtiyari 86

 Political, exchange rate and demand
Risks
• Political risks -- Need for:
– Well-defined rules of commerce
– Independent and clear legal systems
– Political stability
• Exchange rate risks: This risk arises from the fact that companies might incur
their costs in one currency and collect their revenues in other currencies.
(e.g., Japanese production under an expensive Yen in the late 80’s / early
90’s; the role of an expensive EURO these days for the American economy)
• Potential protection to exchange rate risk: Build some flexible over-capacity
to the regional facilities so that production is shifted to the lower-cost
regions.
• Demand risk: Comes from extensive demand fluctuation due to regional
economic crises (e.g., Asia markets between 1996-1998) Plant flexibility is
also a potential protection to this type of risk.

4/13/2022 Dr. Bakhtiyari 87

 Phases III & IV: Selecting specific
locations
• Important factors
• Infrastructure
• Costs
– Labor
– Materials
– Facilities
– Transport
– Inventory
– Taxes and Tariffs

4/13/2022 Dr. Bakhtiyari 88

 Distribution Channels and Supply
Chain Management

4/13/2022 Dr. Bakhtiyari 89

 Supply Chains and the
Value Delivery Network

Upstream partners include raw material suppliers,

components, parts, information, finances, and
expertise to create a product or service

Downstream partners include the marketing channels

or distribution channels that look toward the
customer

4/13/2022 Dr. Bakhtiyari 12-4 90

 Supply Chains and the
Value Delivery Network

Value Delivery Network

The value delivery network is the firm’s suppliers,

distributors, and ultimately customers who
partner with each other to improve the
performance of the entire system

4/13/2022 Dr. Bakhtiyari 12-6 91

 The Nature and Importance of Marketing
Channels
Marketing Channel Defined

Distribution channel is a set of independent

organizations that help make a product or service
available for use or consumption by the consumer
or business users

4/13/2022 Dr. Bakhtiyari 12-8 92

 Role of Channel Members in SCM

Connected by types of flows:

• Physical flow of products
• Flow of ownership
• Payment flow
• Information flow
• Promotion flow

4/13/2022 Dr. Bakhtiyari 12-13 93

 Channel Design Decisions

• Intensive distribution
• Exclusive distribution
• Selective distribution

4/13/2022 Dr. Bakhtiyari 12-40 94

 Channel Management

Channel management involves:

• Selecting channel members
• Managing channel members
• Motivating channel members
• Evaluating channel members

4/13/2022 Dr. Bakhtiyari 12-48 95

 HRM functions in SCM

4/13/2022 Dr. Bakhtiyari 96

 Issues in Workforce management

4/13/2022 Dr. Bakhtiyari 97

 Supplier Relationship
Management

4/13/2022 Dr. Bakhtiyari 98

 Definition
The SRM process aligns, provides structures,
and manages the supplier relationships.

4/13/2022 Dr. Bakhtiyari 99

 Supplier Relationship Management Description
• Aligns and integrates
• Plans, resources, directs, confirms and adjusts the
relationship between company and key suppliers
• Develops the network bonds of trust, commitment,
cooperation & dependence
• Balances the levels of power within supply networks
• Contract Administration is genesis process for SRM

4/13/2022 Dr. Bakhtiyari 100

 Enablers of Supplier Relationship Management

• Effective contract administration processes

• Agreements purposely structured for SRM
• Aligned values between company & Supplier
• Skilled, trained and capable personnel
• Leadership that supports & believes in SRM value
proposition

4/13/2022 Dr. Bakhtiyari 101

 Unit-V

4/13/2022 Dr. Bakhtiyari 102

 What is Bar code?
A barcode is an optical machine readable representation
of data, which shows data about the object to which it
attaches. Originally barcodes represented data by varying
the widths and spacings of parallel lines, and therefore
was referred to as linear or one-dimensional (1D). Later
they evolved into rectangles, dots, hexagons and other
geometric patterns in two dimensions (2D).

4/13/2022 Dr. Bakhtiyari 103

 Bar code technology
• Structured to contain a specific piece of information

• It allows real-time data to be collected accurately and rapidly

• Combination of barcode technology with computer and

application software improves performance, productivity
and profitability

• Two symbologies are used:

➢Discrete symbology
➢Continuous symbology
4/13/2022 Dr. Bakhtiyari 104
 Discrete Symbol
Inter character gaps

Character
4/13/2022 1 Character 2 Character
Dr. Bakhtiyari 3 Character 4 105
 Continuous Symbol
End of next
character

Character 1 Character 2 Character 3

4/13/2022 Dr. Bakhtiyari 106

 Types of bar codes
Linear barcodes (1D) Matrix barcodes (2D)

4/13/2022 Dr. Bakhtiyari 107

 Linear barcodes
• A linear, 1D barcode is made up of a series of
bars of different specified widths. The number
of bars used in the code are defined by the
type of code used
• Linear code meets the requirements as these
are the codes commonly used throughout the
retail and manufacturing industries, easily
created with simple technology/fonts and
easily generated and referenced within
most barcode software packages.
4/13/2022 Dr. Bakhtiyari 108
 Matrix barcodes

• Matrix barcode is a 2D barcode that consists

of cells, rather than bars, arranged in a pattern
(usually square or rectangular). A matrix code
can be incredibly complex storing upto 2,335
characters.
• Matrix barcode is scalable, with commercial
applications as small as 300 micrometres and
as large as a 1 metre (3 ft) square.

4/13/2022 Dr. Bakhtiyari 109

 How are bar codes printed?
• To print bar code labels, a label format must be created with
software that supports bar coding. To print bar codes on
documents or reports, the application software needs to
support bar coding or additional programming will be
required.
• After the label or form is designed, it needs to be output on a
printer that is capable of producing bar codes and supports
the specific symbology that is used.

• Because data is encoded using differences between light and

dark (and narrow and wide) elements—which are measured
in mils, or thousands of an inch—a good quality printer is
essential for producing crisp lines and accurate, readable bar
codes.
4/13/2022 Dr. Bakhtiyari 110
 Barcode readers
• Barcode reader (or barcode scanner) is an
electronic device for reading printed barcodes.
It consists of a light source, a lens and a light
sensor translating optical impulses into
electrical ones.

4/13/2022 Dr. Bakhtiyari 111

 Types of Barcode readers
• Pen-type readers
• Laser scanners
• CCD readers
• Camera-based readers
• Omni-directional barcode scanners
• Cell phone cameras and Smartphone

4/13/2022 Dr. Bakhtiyari 112

 Benefits of Barcoding
• Represent unique identity of a product.
• Accuracy of data input. (Error free)
• Aid effective management of resources
• Saves labour my avoiding manual system.
• Real time data collection.
• More accurate despatch.

4/13/2022 Dr. Bakhtiyari 113

 Emerging Technologies: RFID

4/13/2022 Dr. Bakhtiyari 114

 What is RFID??
• Radio Frequency Identification (RFID)—describes
technologies that use radio waves to automatically
identify people or objects.

• RFID tags can be applied to or incorporated into a

product, animal, or person, for the purpose of
identification using radio waves.

RFID Journal. http://www.rfidjournal.com/faq/16/49 Viewed March 30, 2008

4/13/2022 Dr. Bakhtiyari 115

 Parts to the RFID System
• There are three parts to a RFID system:
1. Antenna
• Provides a means of communication and energy to communicate with
RFID tag
• RFID tag passes through field of the antenna and the RFID tag detects
the activation signal from the antenna causing the RFID tag to transmit
the information on the microchip to the transceiver.
– Permanently affixed to a surface or handheld
2. Transceiver
• Has a decoder to interpret the data

3. RFID Tag (Transporter)

• Programmed with information

“How RFID Works,” http://www.technology.com/ct/Technology-Article.asp?ArtNum=2 Viewed March 31, 2008

4/13/2022 Dr. Bakhtiyari 116
4/13/2022 Dr. Bakhtiyari 117
 Transportation

• Transportation refers to the movement of

product from one location to another as it
makes its way from the beginning of supply
chain to the customer.

• Transportation is an important supply chain

driver because products are rarely produced
and consumed in the same location.
4/13/2022 Dr. Bakhtiyari 118
 Role of transportation in supply chain
management

4/13/2022 Dr. Bakhtiyari 119

 Modes of Transportation

Air Water Road Rail Pipeline

intermodal

4/13/2022 Dr. Bakhtiyari 120

Road Transport Advantages:
❖It is a relatively cheaper mode of transport as compared to other modes.
❖ It is a flexible mode of transport as loading and unloading is possible at any destination. It
provides door-to-door service.
❖ It helps to carry goods from one place to another, in places which are not connected by other
means of transport like hilly areas.

Limitations of Road transport:

❖Due to limited carrying capacity road transport is not economical for long distance
transportation of goods.
❖ Transportation of heavy goods or goods in bulk by road involves high cost.

4/13/2022 Dr. Bakhtiyari 121

 Air
• Air freighting is commonly used by companies
who work with short lead times, or advanced
service levels.

• Air transportation is best suited for small,

high- value items or time sensitive emergency
shipments that have to travel a long distance.

• Air carriers normally move shipments that

4/13/2022 Dr. Bakhtiyari 122
have high value but light weight .
Advantages of Air transportation:
o It is the fastest mode of transport.
o It is very useful in transporting goods to the area, which are not accessible by any
other means.
o Reduces lead time.
o Improved service levels

Disadvantages:
o It is relatively more expensive mode of transport.
o It is not suitable for transporting heavy and bulky goods.
oIt is not suitable for short distance travel.

4/13/2022 Dr. Bakhtiyari 123

 Rail

• Rail transport uses freight trains for the

delivery of merchandise. Freight trains are
usually powered by diesel, electricity and
steam.

• Rail is suited for bulk shipment of products

like fertilizer, cement, food grains and coal etc.
from the production plant to the warehouses.
4/13/2022 Dr. Bakhtiyari 124
Advantages of Rail transportation:
➢ It is relatively faster than road transport.
➢ It is suitable for carrying heavy goods in large quantities over long distances.
➢Cost effective.

Limitations of Rail transportation:

➢ It is relatively expensive for carrying goods over short distances.
➢ It is not available in remote parts of the country.
➢ It provides service according to fixed time schedule and is not flexible for loading
or unloading of goods at any place.

4/13/2022 Dr. Bakhtiyari 125

 Water
 Water transport uses ships and large commercial vessels that carry
billions of tons of cargo.

 water transport is used primarily for the movement of large bulk

commodity shipments and it is the cheapest mode for carrying such
load.

 Water transport is particularly effective for significantly large

quantities of goods that are non-perishable in nature and for cities or
states that have water access.

4/13/2022 Dr. Bakhtiyari 126

Advantages of water transportation:
❑ It is a relatively economical mode of transport for bulky and heavy goods.
❑ The cost of maintaining and constructing routes is very low most of them are
naturally made.
❑ It promotes international trade.

Disadvantages:
❑ The depth and navigability of rivers and canals vary and thus, affect operations of
different transport vessels.
❑ It is a slow moving mode of transport and therefore not suitable for transport of
perishable goods.
❑It is adversely affected by weather conditions.
❑ Sea transport requires large investment on ships and their maintenance.
4/13/2022 Dr. Bakhtiyari 127
 Pipeline
 Pipeline is used primarily for the transport of crude
petroleum, refined petroleum products and natural gas.
 It include a significant initial fixed cost in setting up the
pipeline and related infrastructure.
 Pipelines are not flexible and this scope is limited with
respect to commodities.
 Unable to transport a variety of materials

4/13/2022 Dr. Bakhtiyari 128

 Intermodal Transportation
• Intermodal Transportation is use of more than one mode of
transport for the movement of shipment from origin to its
destination.

• Intermodal operation is used two or more mode of transport

to take the advantage of inherent

economies of each and thus

provide the integrated service at

lower cost.

For example: truck/water/rail.

4/13/2022 Dr. Bakhtiyari 129
 Economic factor

Factors influencing Technological

Environment
transportation factors
factors

Geographical
factors

4/13/2022 Dr. Bakhtiyari 130

 Complaint Handling

4/13/2022 Dr. Bakhtiyari 131

 Complaint Handling

4/13/2022 Dr. Bakhtiyari 132

The Nine Stars Exercise

4/13/2022 Dr. Bakhtiyari 133

Objectives
By the end of this module you will be able :

List and describe the

Explain the nature of
different types of
complaints
complaints

List different Describe ways to

complainers and how resolve complaints
to communicate with using the LAST
them sequence

Explain the process for Describe ways to build

documenting customer loyalty
complaints and giving through effective
feedback complaint handling

4/13/2022 Dr. Bakhtiyari 134

Definition of Complaint

4/13/2022 Dr. Bakhtiyari 135

Why do Guests not return?

Personal
68%
Attitude

Merchandise 14%

Price 9%

Other Contacts 5%

Move away 3%

Die 1%

4/13/2022 Dr. Bakhtiyari 136

Welcoming Complaints

Complaint Improvement

Improved Satisfied
Business Customer

4/13/2022 Dr. Bakhtiyari 137

Complaints are Opportunities
to…
Evaluate how well you
are doing

Identify weak points in

Create long-term your systems and
loyalty processes and put
them right

See situations from the

Improve customer
customer’s point of
satisfaction
view

4/13/2022 Dr. Bakhtiyari 138

LAST Approach to handling
complaints

Listen Attentively
L

Apologize & Empathize

A

Solve the issue on hand

S (Solution provided)

Thank the Guest

T

4/13/2022 Dr. Bakhtiyari 139

Managing Effective Communication
Clear
and calm
voice

Speak
normally
Managing
Effective
Communication
•Eye contact
•Calm facial expressions
Body
•Calm, friendly gestures
language
•Professional posture
•Concerned and interested

Involve
the guest
4/13/2022 Dr. Bakhtiyari 140
Behaviors to Avoid
• Confrontational • Forceful hand • Entering
situations gestures guest’s
personal space

• Defensive body • Raising your • Bad language

language voice

4/13/2022 Dr. Bakhtiyari 141

Always Remember…

If we don’t take care of our

customers someone else will.

4/13/2022 Dr. Bakhtiyari 142

 Retail SCM

4/13/2022 Dr. Bakhtiyari 143

 Retail supply chain

• retail supply chain is the processes you use to get

your products to your consumers. It encompasses
everything from obtaining the raw materials to
make your product to delivering that product into
your shoppers’ hands. It encompasses everything
from obtaining the raw materials to make your
product and delivering that product into your
shoppers' hands as fast as possible

4/13/2022 Dr. Bakhtiyari 144

 Challenges in retail supply chain
• Tight profit margin.
• Meeting customer expectations.
• Operational efficiency.
• Quality & compliance.
• Omni channel integration
• Automation and Robotics
• Forecasting and Predictive Analytics
• High customer expectations

4/13/2022 Dr. Bakhtiyari 145

4/13/2022 Dr. Bakhtiyari 146
Packaging is a process of providing container or
wrapper to the product for its safety and
transportation, the SCM and packaging are the
two integral elements exists together
Packaging and handling services minimize
product damage and distribution delays. ... Our
services, and the support of our experienced
teams, also means you can stay focused on your
core business. Ensure the quality, integrity and
timely delivery of your cargo.

4/13/2022 Dr. Bakhtiyari 147

4/13/2022 Dr. Bakhtiyari 148
4/13/2022 Dr. Bakhtiyari 149