SWAMI VIVEKANAND UNIVERSITY, SAGAR(M.P.

PROJECT FILE
MBA SEM - I

A STUDY OF SUPPLY CHAIN SYSTEM IN

MENUFACTURING INDUSTRY
GUIDED BY- DR. SUNITA DIXIT (MEM)
MADE BY – PRINCE KORI
Enrollment Number - PU00824EPG00012
REGISTRATION - PU00824A000505
 Table of Contents
• What is manufacturing supply chain
management?
• The 5 main components of
manufacturing supply chain
management
• Are supply chain disruptions the new
normal?
• The importance of SCM for
manufacturers
• Manufacturing supply chain
management best practices for SMEs
• Key takeaways
1.What is manufacturing supply chain
management?
Supply chain management (SCM) is a central concept in
commerce that refers to the management of everything
related to the flow of goods of a company. It revolves around
every process that plays a part in raw materials being
transformed into finished products and also involves aspects
of after-sale activities like handling warranty claims and
returns.
Manufacturing supply chain management includes all
aspects of business that deal with physical goods and their
logistics: inventory optimization, vendor management,
logistical processes like shipping, distribution, and delivery,
but also manufacturing processes such as WIP (work in
process) inventory management, production scheduling,
capacity planning, demand forecasting, etc.
The role of SCM is to make sure that the supply of goods is
as streamlined as possible – that raw materials make it to
the warehouse or production facility at just the right time and
in the right quantity; that production capacities match
demand as closely as possible; and that lead times and
product costs stay minimal. As such, SCM can be seen as
part of the larger inventory management process.
 • What are supply chains?
A supply chain is the whole distance that a product travels
from the beginning of its manufacturing effort to finished
sales. Far more than just logistics management, it comprises
the sum of processes, people, businesses, activities,
information, and resources that are needed to get a product
or service from scratch to consumers.
Therefore, a supply chain includes not just raw materials but
also the procurement management of the materials. On the
other end of the pipeline, it is not just finished goods, but also
their distribution network, logistics partners, and returns.
All of the organizations that constitute a supply chain are
joined together through physical and information flows.
Physical flows are the transformation, movement, and
storage of goods and materials. Information flows, on the
other hand, allow the various players in a respective supply
chain to coordinate plans and control the day-to-day flow of
goods throughout the supply chain.
2. The 5 main components of manufacturing
supply chain management
There is no single correct way to manage a supply chain
because there are countless different ways of doing
business. Still, supply chain management systems usually
consist of five essential phases: strategy, sourcing,
manufacturing, delivery, and returns. Let’s go over these in a
bit more detail.
1. Planning and strategy: Every organization must plan
and manage all the resources needed to meet customer
demand for their product or service. The supply plan
should factor in everything from material availability and
production capacity to labor and equipment
requirements, logistical constraints, budgets, etc. The
more supply-related aspects of production are
considered in the supply plan, the fewer surprises one
can expect down the line. The logistics of the production
effort should ideally be considered already in the design
phase of the product itself. A supply plan can go into
various levels of depth with planning, for example in
a multi-level supply planning approach.
2. Sourcing: Ensuring high-quality raw materials from
reputable vendors is an essential aspect of any
production effort. The process does not end once the
suppliers are under contract. Instead, the supply chain
 manager is tasked with continuous vendor
management. Sourcing also involves
continuous procurement planning and purchase order
management (ordering, delivery, authorizing payments,
etc.) throughout the manufacturing process. The
resilience of the supply side of production also needs to
be accounted for. For example, through building long-
lasting supplier relationships or gaining alternative
sources that help ensure timely material deliveries even
amidst market disruptions.
3. Manufacturing: This central phase in supply chain
management details all processes related to in-house
production i.e., the transformation of raw materials (and
services) into finished goods. Things to take into account
in the SCM system include production efficiency,
planning and scheduling, inventory optimization, quality
assurance, packaging, etc. Most manufacturing
companies measure the quality, production output, and
worker productivity of manufacturing processes to
ensure that the company is making products that meet
all quality standards. Manufacturing-centric key
performance indicators (KPIs) are often used to better
measure the processes.
4. Delivery and logistics: This phase entails the logistics
of the whole production operation. Coordinating
 customer orders, scheduling deliveries, dispatching
loads, creating and sending invoices, receiving
payments, etc., all fall into the delivery phase. Here too,
the resilience of the system should be factored in – an
extra distribution partner or delivery method might often
come in handy and contributes to a professional brand
image, should disruptions occur. For example, while you
might have designated vehicles for shipping, outsourcing
delivery to a logistics company may prove a lower-cost
alternative in some circumstances.
5. Returns and after-sales: For the vast majority of
commercial products, an SCM effort needs to have in
place policies regarding customer returns and warranty
care. Sure, an ideal product is one that never breaks
down or needs repairs, but the reality is that mistakes
and defects are inevitable. Foresight into developing a
functional and cost-effective system for after-sales
equals more customer satisfaction in the long run. The
capacity of supply chains to be unidirectional is an
increasingly important factor for today’s manufacturers.
Suppliers and producers need networks that are quick
to respond and flexible in taking back defective, extra, or
unwanted products.
3. Are supply chain disruptions the new
normal?
In the not-so-distant past, basic supply chains were quite
straightforward and complex SCM was practically the exclusive
worry of large multinational companies. A small business had a
few long-standing suppliers with locally sourced materials.
Prices and lead times were largely stable and fluctuated only
with the hum of the holiday season.
In recent years, however, and especially after the pandemic, an
increasingly globalized marketplace and near-constant supply
chain disruptions have become the new normal across the
entire manufacturing industry. A 2022 study by Deloitte and
Manufacturers Alliance, points out that the era of simple
supply chains is essentially gone for good.
Shipping delays, raw material shortages, rising shipping prices,
and the resulting production planning and inventory
management issues have become mainstays in manufacturing
as a whole. Increasing control over one’s supply chain by
implementing effective SCM practices is therefore increasingly
important for companies of any size. This goes double for
smaller players that need to juggle tight profit margins and
have fewer resources for backups.
4. The importance of SCM for manufacturers

Supply chain management is a natural part of any company

purveying physical goods, be it distributors, retailers, or
manufacturers. Still, SCM includes some distinct
considerations for the latter that we will look at next.
Manufacturing has innate complexities
Manufacturing supply chains are generally far more
complicated than distribution. Materials and components
need to converge with labor and processing in a timely,
planned-out manner, and in many consecutive instances. This
implies precise forecasting and capacity planning to
adequately schedule production. It also means that inventory
optimization efforts need to take into account a number of
constraints absent in most distribution operations.
Manufacturing accounting is also more complicated as every
step in the supply chain incurs extra value and added costs
that need timely consolidating.
Outsourcing affects global supply chains
Another key aspect is that in the modern manufacturing
landscape, one brand often has several companies
contributing to manufacturing its products. With the rising
complexity of product lines, many manufacturers especially in
the SME space are relying on partial or total sub-assembly
production for their revenue. Conversely, others are
increasingly depending on sub-contractors to produce some or
all of their components, and only assemble the final products
in-house.
As a result, sub-contracting and outsourcing are seeing a big
surge in a number of industries. This inevitably translates into
more complicated and branching logistical chains which need
extra collaboration and management to avoid costly mistakes.
Manufacturing is experiencing a digital transformation
Finally, with the onset of Industry 4.0, modern manufacturing is
becoming increasingly reliant on digital technologies and
solutions. Manufacturers are adopting Internet of Things (IoT)
devices, implementing robotics, and utilizing machine
learning. All to usher in more control over their processes by
way of real-time analytics and data-based decision-making.
For supply chains and supply chain management, this means
much greater visibility. End-to-end supply chain visibility, as
made possible by digital transformation, allows companies to
better manage the increasing complexities of their supply
chains and accelerate response times, increasing control and
traceability.
5. Manufacturing supply chain management
best practices for SMEs
To end this article, here are 5 manufacturing supply chain
management best practices that any small or medium
manufacturer should focus on.
1. Facilitate collaboration with key nodes in the supply
chain. More collaboration with key supply chain partners
means faster response times in case of sudden
disturbances. Implement supplier relationship
management practices to strengthen partnerships.
Consider vendors as partners rather than service
providers, simplify and facilitate back-and-forth
information sharing, and check in with them frequently.
2. Keep up to date with shifts in regional supply. Today’s
logistics networks are dynamic and fast-changing. While it
certainly makes sense to strengthen existing relationships,
it’s also a good idea to keep a close eye on any news and
events that can introduce opportunities or alternative
sources. A continuous effort to improve the efficiency of
the supply chain is among the basic tenets of effective
supply chain management.
3. Measure supply chain performance regularly. The only
reliable way to ensure an efficient supply chain is by
measuring its efficiency. This is where a number of supply
chain-centric key performance indicators (KPIs) come into
play. Examples of useful metrics include On-Time and In-
 Full Delivery, Customer Order Cycle Time, Fill Rate,
Inventory Days of Supply, etc.
4. Increase supply chain resilience. Utilizing production
strategies like Just-in-Time (JIT) or adopting pull-type
workflows is perhaps the best way to minimize waste and
increase manufacturing efficiency. However, these types
of optimizations are also more susceptible to disruptions.
With global supply chains in turmoil, many manufacturing
sectors are seeing a resurgence of Just-in-Case (JIC)
manufacturing practices. This is a chief reason why you
should always keep a few extra vendors on the quick dial.
5. Implement manufacturing software. Lastly,
implementing manufacturing software can make a
decisive difference in your SCM efforts. Good MRP
systems and manufacturing ERPs include built-
in procurement tools as well as vendor and order
management modules, integrated with the whole
manufacturing operation. This provides you with real-time
info on all inventory movements and introduces added
visibility and traceability over the whole supply chain. The
best providers also include Quality Assurance (QA),
Customer Relationship Management (CRM), and Return
Merchandise Authorization (RMA) modules. Recent years
have seen a growing number of affordable yet capable
cloud-based manufacturing ERPs hit the market. These
constitute a viable and cost-effective choice for SMEs.
6. Key takeaways
• Supply chain management is a central concept in
commerce that refers to the management of everything
related to the flow of goods of a company.
• SCM includes aspects of inventory optimization, vendor
management, logistical processes like shipping,
distribution, and delivery, but also manufacturing aspects
like production scheduling, and capacity planning, as well
as customer returns and RMAs.
• The five main components of a supply chain management
system are planning and strategy, procurement and
sourcing, manufacturing, distribution, and returns or after-
sale support.
• Manufacturing supply chain management has innate
complexities compared to SCM for distributors. This is
because, in manufacturing, raw materials are transformed
into components through labor, introducing constraints
and accounting considerations in each step of the supply
chain.
• Manufacturing supply chain management best practices
for SMEs include strengthening collaboration with key
suppliers, regularly measuring supply chain performance,
increasing supply chain resilience by building backup
systems, and implementing manufacturing software for
added visibility and control over the supply chain and
vendors.