2015

SUPPLY CHAIN
MANAGEMENT IN
AUTOMOBILE INDUSTRY
BUDGE BUDGE INSTITUTE OF TECHNOLOGY
BUDGE BUDGE, KOLKATA-700137

PRESENTED BY: 4TH YEAR MECHANICAL ENGINEERING STUDENTS

ADITYA BHATTACHARJEE: ROLL NO- 006

AKASH DUTTA: ROLL NO- 008
DEBASISH BASAK: ROLL NO- 025
MONOJIT CHANDRA: ROLL NO- 050
NITESH KHAITAN: ROLL NO- 055
PRAKASH SHARMA: ROLL NO- 059
MUSTABA NEYAJ: ROLL NO- 052
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SUPPLY CHAIN MANAGEMENT

INTRODUCTION:

Supply Chain Management encompasses every effort involved in producing and

delivering a final product or service, from the suppliers supplier to the customers
customer. Supply Chain Management includes managing supply and demand, sourcing
raw materials and parts, manufacturing and assembly, warehousing and inventory
tracking, order entry and order management, distribution across all channels, and delivery
to the customer.
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Why Supply Chain Management Is Important?

Strategic Advantage : It Can Drive Strategy
Manufacturing is becoming more efficient.
SCM offers opportunity for differentiation or cost reduction.

Globalization : It covers the world

Requires greater coordination of production and distribution.
Increased risk of supply chain interruption.
Increases need for robust and flexible supply chains.
At the company level, supply chain management impacts.

Cost :
For many products, 20% to 40% of total product costs are controllable logistics
costs.

Service : For many products, performance factors such as inventory availability and
speed of delivery are critical to customer satisfaction.
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Objectives in the Supply Chain Management

Purchasing :
Stable volume Requirements.
Flexible delivery time.
Little variation in mix.
Large quantities.

Manufacturing :
Long run production.
High quality.
High Productivity.
Low production cost

Warehousing :
Low inventory.
Reduced transportation costs.
Quick Replenishment capability.

Customers :
Short order lead time.
High in stock.
Enormous variety of products.
Low prices.
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Cycle View of Supply Chains

Customer
Customer Order Cycle

Retailer
Replenishment Cycle

Distributor

Manufacturing Cycle

Manufacturer
Procurement Cycle
Supplier
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Customer order cycle:

Customer arrival

Customer order entry

Customer order fulfillment

Customer order receiving

Replenishment cycle:
Retail order trigger

Retail order entry

Retail order fulfillment

Retail order receiving

Manufacturing cycle:

Order arrival from the distributor, retailer, or customer

Production scheduling

Manufacturing and shipping

Receiving at the distributor, retailer, or customer

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Push/Pull View of Supply Chains:

Procurement, Customer Order

Manufacturing and Cycle
Replenishment cycles

PUSH PROCESSES PULL PROCESSES

Customer
Order Arrives

Pull processes: execution is initiated in response to a customer order

Push processes: execution is initiated in anticipation of customer orders

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SUPPLY CHAIN DESIGN:

Three Components:

Insourcing/OutSourcing:
The Make/Buy or Vertical Integration Decision

Partner Selection:
Choice of suppliers and partners for the chain

The Contractual Relationship:

Arm's length, joint venture, long-term contract, strategic alliance, equity
participation, etc.

Supply chain objective:

Maximize overall value generated
Value strongly correlated to supply chain profitability the difference between the
revenue generated from the customer and the overall cost across the supply chain
Example: A customer purchasing a computer from Dell pays $ 700 (the revenue)
Dell and other stages of the supply chain incur cost to convey information.
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The Dynamics of the Supply Chain:

Order Size

Customer
Demand

Production Plan

Time
Source: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998
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LEAN SUPPLY CHAIN MANAGEMENT

Lean Supply Chain Management Principles Derive from Basic Lean

Principles

Focus on the supplier network value stream

Eliminate waste

Synchronize flow

Minimize both transaction and production costs

Establish collaborative relationships while balancing cooperation and

competition

Ensure visibility and transparency

Develop quick response capability

Manage uncertainty and risk

Align core competencies and complementary capabilities

Foster innovation and knowledge-sharing

Theory: Lean Represents a Hybrid Approach to Organizing Interfirm Relationships

Markets (Arms Length): Lower production costs, higher coordination costs

Firm buys (all) inputs from outside specialized suppliers
Inputs are highly standardized; no transaction-specific assets
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Prices serve as sole coordination mechanism

Hierarchies (Vertical Integration): Higher production costs, lower

coordination costs
Firm produces required inputs in-house (in the extreme, all inputs)
Inputs are highly customized, involve high transaction costs or dedicated
investments, and require close coordination

Lean (Hybrid): Lowest production and coordination costs; economically

most efficient choice-- new model
Firm buys both customized & standardized inputs
Customized inputs often involve dedicated investments
Partnerships & strategic alliances provide collaborative advantage

Lean Supply Chain Management Learning Points

Lean supply chain management represents a new way of

thinking about supplier networks

Lean principles require cooperative supplier relationships while

balancing cooperation and competition

Cooperation involves a spectrum of collaborative relationships

& coordination mechanisms

Supplier partnerships & strategic alliances represent a key

feature of lean supply chain Management
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CONCLUSION

Supply chain management is an exciting and important area of study. Specialist

companies like Exel are able to save the worlds leading businesses large
amounts of money, time and effort by creating an effective supply chain. Next time
you see a new VW Beetle you will be better able to appreciate that the high quality
of the product and its value for money are not only a result of high quality design
and engineering, but also a direct result of lean production, just-in-time methods
and premium supply chain management.
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AGILE AND LEAN

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Agile Supply Chain Management

The importance of time as a competitive weapon has been recognized for some time

(1).The ability to be able to meet the demands of customers for ever-shorter delivery
times and to ensure that supply can be synchronized to meet the peaks and troughs of
demand is clearly of critical importance in this era of time-based competition

(2).To become more responsive to the needs of the market requires more than speed, it
also requires a high level of manoeuvrability that today has come to be termed agility.

WHAT IS AGILITY?

Agility is a business-wide capability that embraces organizational structures, information

systems, logistics processes and, in particular, mind-sets. A key characteristic of an agile
organization is flexibility. Indeed the origins of agility as a business concept lies in flexible
manufacturing systems (FMS). Initially it was thought that the route to manufacturing
flexibility was through automation to enable rapid change (i.e. reduced set-up times) and
thus a greater responsiveness to changes in product mix or volume. Later this idea of
manufacturing flexibility was extended into the wider business context and the concept
of agility as an organizational orientation was born.

THE AGILE SUPPLY CHAIN:

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The use of information technology to share data between buyers and suppliers is, in
effect, creating a virtual supply chain. Virtual supply chains are information based rather
than inventory based.

Conventional logistics systems are based upon a paradigm that seeks to identify the
optimal quantities of inventory and its spatial location. Complex formulae and algorithms
exist to support this inventory-based business model. Paradoxically, what we are now
learning is that once we have visibility of demand through shared information, the
premise upon which these formulae are based no longer holds. Electronic Data
Interchange (EDI) and now the Internet have enabled partners in the supply chain to act
upon the same data i.e. real demand, rather than be dependent upon the distorted and
noisy picture that emerges when orders are transmitted from one step to another in an
extended chain.
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Conclusions:
Marketing management has not traditionally recognized the importance of logistics and
supply chain management as a key element in gaining advantage in the marketplace.
However, in today s more challenging business environment, where volatility and
unpredictable demand becomes the norm, it is essential that the importance of agility be
recognized.

Leading companies are already implementing marketing strategies which are

underpinned by a supply chain strategy designed with agility in mind. These are the
organizations that will be best equipped for survival in the uncertain markets of the 21st
century.
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LEAGILE SUPPLY CHAIN MANAGEMENT

IT AND LEAGILE SUPPLY CHAIN

Combination of leanness and agility within the scope of one firm or a single
supply chain can be called as leagility. Naylor et al. defined leagility as the
combination of the lean and agile paradigm within a total supply chain strategy
by positioning the decoupling point so as to best suit the need for responding
to a volatile demand downstream yet providing level scheduling upstream from
the decoupling point. The part of the supply chain towards that satisfies the
customer orders and the part of the supply chain based on planning is
separated by the decoupling point. The decoupling point also acts as the
strategic stock holding point between fluctuating customer orders and product
variety and smooth production output. On the downside of the decoupling
point is a highly variable demand from the customer side for high variety,
whereas on the upside of the decoupling point the demand is smooth with the
variety reduced.
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Leagile is the combination of the lean and agile within a total supply chain strategy
by positioning the decoupling point.

Combined to take the advantage of both in single unit

Because there is always need to response to volatile demand in downstream and

provide level schedule in upstream from marketplace

CONCLUSION
Supply chain management is an exciting and important area of study. Specialist
companies like Exel are able to save the worlds leading businesses large amounts of
money, time and effort by creating an effective supply chain. Next time you see a new
VW Beetle you will be better able to appreciate that the high quality of the product and
its value for money are not only a result of high quality design and engineering, but also a
direct result of lean production, just-in-time methods and premium supply chain
management.