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TOTAL SUPPLY CHAIN MANAGEMENT

TOTAL SUPPLY CHAIN MANAGEMENT. syllabus. CUSTOMER AND THEIR SERVICE 1 INTORDUCTION TO SUPPLY CHAIN MANAEMENT 2 RECENT BUSINESS STRATEGIES AND GLOBALIZATION 3 SUPPLY CHAIN BREAKERS 4 LOGISCTICS AND COMPETITIVE STRATEGY 5 TOTAL DISTRIBUTION AND COST PERFORMANCE – AUDITING 6

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TOTAL SUPPLY CHAIN MANAGEMENT

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  1. TOTAL SUPPLY CHAIN MANAGEMENT

  2. syllabus • CUSTOMER AND THEIR SERVICE 1 • INTORDUCTION TO SUPPLY CHAIN MANAEMENT 2 • RECENT BUSINESS STRATEGIES AND GLOBALIZATION 3 • SUPPLY CHAIN BREAKERS 4 • LOGISCTICS AND COMPETITIVE STRATEGY 5 • TOTAL DISTRIBUTION AND COST PERFORMANCE – AUDITING 6 • MEASUREMENT OF SUCCESS AND BENCHMARKING 7 • INSIGHT OF MATERIALS MANAGEMENT 8 • PURCHASE ORGANIZATION 9 • PROCUREMENT PROCUDERE AND POLICY 10 • VENDOR DEVELOPMENT AND EVALUATION 11 • TYPES OF PURCHASE 12 • COST ELEMENTS 13 • ECONOMIC ORDER QUANTITY (EOQ) AND JUST IN TIME (JIT) 14 • COMPUTER SUPPORT IN MATERIAL MANAGEMENT 15 • TRANSPORTAION AND INFRASTRUCTRUE 16 • INVENTORY CONCEPT AND ANALYSIS 17 • PLAN AND WAREHOUSE 18 • MATERIALS HANDLING AND PACKAGING 19 • DISTRIBUTION NETWORK DESIGN AND CHANNELS OF DISTRIBUTION 20 • FACILITY LOCATION DECISION 21 • INFORMATION SYSTEM 22 • CASE STUDIES

  3. UNIT I CUSTOMER AND THEIR SERVICE

  4. Introduction • The customer is the main factor for whom the business is run and due to his satisfaction the business is flourishing. • Earlier it was seller’s market and the importance of customer satisfaction is rarely understood. • As the situation turns to the buyer’s market, the customer importance increases.

  5. Customer service performance Customer service is defined as • An activity or function to be managed such as order processing or handling of customer complaints. • Actual performance on parameters such as ability to ship orders within a certain period. • Part of an overall corporate philosophy. • The essence of demand management is to improve the ability of firms throughout the supply chain particularly manufacturing through the customer by considering their satisfaction.

  6. The number of ways in which effective demand management will help the common goal of providing efficient customer service and thereby satisfying customers and solving their problems are as below: • Gathering and analyzing knowledge about consumers, their problems and their unmet needs. • Identifying partners to perform the functions needed in the demand chain. • Assigning the functions that need to be done to the channel member that can perform them mostly effectively and efficiently.

  7. Sharing with other supply chain members knowledge about consumers and customers, available technology and logistics challenges and opportunities. • Delivering and executing the best logistics, transportation and distribution methods to deliver product and services to consumers in the desired manner.

  8. The customer service dimension • It highlights the importance of managing the marketing and logistics interface on an integrated basis, emphasizes the need to understand the multiple elements of service from the customers’ perspective. • From the point of view of logistics function, customer service can be viewed as having four dimensions: • Time • Dependability • Communication • Convenience

  9. Time • The time factor is usually order cycle time from the perspective of seller looking at customer service. • The buyer usually refers to the time dimension as the lead time or replenishment time .

  10. Dependability • Some customers consider dependability as more important than lead time. • The customer firm can minimize its inventory level if lead time is fixed. • This means there is no need to keep safety stock to ground against stock outs resulting from fluctuating lead times. • Cycle time provides a dependable lead time reduces some of the uncertainty a customer faces. • Lead time dependability directly affects customers inventory level and stock out costs.

  11. Communication • The two logistics activities vital to order filling are the communication of customer order information to the order – filling area and the actual process of picking out of the inventory, the items ordered. • Communication must be a two – way process. • The seller must be able to transmit vital logistics service information to the customer. • Say for eg., information concerning shipment date, the carrier, the route etc.

  12. Convenience • This means the logistics service level must be flexible. • Convenience recognizes customers different requirements. • a seller can group custom requirement by such factors as customer size, market area and the product line the customer is purchasing. • This level market segmentation enables the logistics manager to recognize customer service requirements and to attempt to fulfill those demands economically as possible.

  13. The customer service elements • There are three customer service elements: • Pre – transaction elements • Transaction elements • Post – transaction elements

  14. Pre – transaction elements • Written customer service policy • Is it communicated internally and externally • Is it understood • Is it specific and quantified where possible? • Accessibility • Are we easy to contact or do business with? • organization structure • Is there a customer service management structure in place? • What level of control do they have over their service process? • System flexibility • Can we adapt our service delivery systems to meet particular customer needs?

  15. Transaction elements • Order cycle time • What is the elapsed time from order to delivery? • What is the reliability / variation? • Inventory availability • What percentage of demand for each item can be met from stock? • Order fill rate • What proportion of orders are completely filled within the stated lead time? • Order status information • How long does it take us to respond to a querry with the required information? • Do we inform the customer of problems or do they contact us?

  16. Post – transaction elements • Availability of spares • What are the in-stock levels of service parts? • Call – out time • How long does it take for the engineer to arrive? • What is the first call fix rate? • Product tracing / warranty • Can we identify the location of individual products once purchased? • Can we maintain/ extend the warranty to customers’ expected levels? • Customer complaints, claims etc.

  17. Customer satisfaction • Customer satisfaction is the customer’s overall measurement of all elements of the logistics management, such as product, price, promotion and place. • Customer service is also a part of the customer satisfaction.

  18. The 3 R’s in customer service • Many companies have the concept of following the 3 R’s in the customer service. They are • Respect your customer • Take Responsibility for your actions and products • Give your customer a full Refund when it just isn’t right

  19. 7 unhealthy attitudes of disrespect • Unprofessional greetings. • Staff who do not know the company mission statement. • Staff who do not know the product. • Staff who do not understand that the customer is the only reason they are getting a paycheck. • Management who don’t listen to staff on how to “fix” customer service • Giving the front line staff the authority to “fix” a customer problem on the spot • Respect customer’s time

  20. 7 steps for customer retention • Offer only proven and quality services and / or products. • Demonstrate customer appreciation. • Provide responsive and pro – active customer service. • Give instruction on how to get the most use from products and / or service. • Share testimonials from customers with other customers and potential customers. • Educate the customer about the industry or market and about the value of the business. • Invite customer’s opinion and feedback on products and / or services. retaining more customers can result in significantly higher profits to the organizations.

  21. Customer service and levels of product • Customer service can be thought of as something a firm provides to those who purchase its products or services. • According to market there are three levels of products: • The core benefit or service which constitutes what the buyer really buying. • The tangible product or the physical product or service itself. • The product which includes benefits that are secondary to it but an integral enhancement to the tangible product the customer is purchasing. Say features like installation, warranties and after-sales-service.

  22. Customer service • Is a concept whose importance reaches far beyond the logistics area. • Customer service frequently affects every area of the firm by attempting to ensure customer satisfaction through the provision of service to the customer. • Examples of customer service are • Providing financial and credit terms. • Guaranteeing delivery within specified time period. • Installing a product. • Maintaining satisfactory spare parts inventory. • Revamping a billing procedure to accommodate a customer’s request.

  23. Levels of customer service • There are 3 levels of customer service, • Customer service as an activity: • This level treats customer service as a particular task that a firm must accomplish to satisfy the customers needs. • Customer service as performance measures: • This level emphasizes customer service in terms of specific performance measures such as the percentage of orders delivered on time and complete and the number of orders processed within acceptable time limits. • Customer service as philosophy: • This level elevates customer service to a firm wide commitment to providing customer satisfaction through superior customer service.

  24. Implementing customer service standards The key for successfully developing and implementing customer service standards are: • To be wary of adopting easily achievable performance standards. • Emphasis on total quality or on creation of the “perfect order” are very critical to any acceptable quality level set below 100 percent. • The firm should develop customer service policies and standard through customer consultation. • The firm should develop procedures to measure, monitor and control the customer service quality called for by the firm performance measures and standards.

  25. Customer service issues The questions guide in developing a sound customer service policy and standard performance: • What do customers feel about present levels of service? • Do their perceptions match up with ours? • How do our services compare to those of our competitors? • Are we using appropriate standards and measurements to monitor our service performance? • Is it possible to segment our customers according to the varying degrees of service they require? • Can we produce the same levels of service we are presently providing in amore cost – effective manner? • Can improved customer service be used as a strategic weapon to provide an important competitive advantage? • In the minds of our customers, how important is service compared to other elements of the marketing like price, promotion and products?

  26. Improving customer service performance The levels of customer service a firm achieves, often can be improved through one or more of the following actions: • Thoroughly researching customer needs. • Setting service levels that make realistic trade – offs between revenues and expenses. • Making use of the latest technology in order of processing systems. • Measuring and evaluating the performance of individual logistic activities.

  27. Improving customer service performance Automation improves customer service by providing the following benefits to the customer: • Better product availability • More accurate invoices • The ability to reduce stock levels and their associated inventory carrying costs • Improved access for information on order status. • Automated order processing systems enhance the firs’s ability to perform all the transaction and post – transaction elements of customer service.

  28. Improving customer service performance Finally the development of an effective customer service program requires the establishment of customer service standards which performs the following functions: • Reflect the customer’s view point • Provide an operational and objective measure of service performance • Provide management with cues for corrective action and improvement of customer service.

  29. Methods to give customer service • Hire people who have a service attitude. • Make the customer’s time with you an experience. • Regularly inform all your employees about what’s going on in your company. • Make every decision with the customer in mind. • Make the customers know an agenda item at every staff meeting. • Empower your employees to do the right thing. • Continually ask yourself how you can improve and add value. • Create an atmosphere of excellence. • Continually do the unexpected. • Never let an untrained employee have customer contact.

  30. UNIT 2 INTRODUCTION TO SUPPLY CHAIN MANAGEMENT(SCM)

  31. Introduction • Supply chain management is the systematic, strategic coordination of the traditional business functions within a particular company and across the business within the supply chain, for the purpose of improving performance. • It consist of a company, immediate supplier, immediate customer directly linked by one or more of the upstream and downstream flows of product , services, finance and information.

  32. SCM concept • Successful companies smartly manage the 4 key business resources of Man, Material, Money and Information. • Proper planning and efficient management of flows of material and related information from supplier to the customer through the organization forms the major responsibility of supply chain management. • SCM consists of developing smarter ways to choose, buy from and sell to the business partners of the organization. • Every interface in the supply chain represents movement of goods, information flow, transfer of documents and purchase and sale.

  33. Activities of SCM • This is an extended enterprise that spreads across company encompassing the logistics related activities of all the firm involved in the supply chain. • This extended enterprise integrates the flow of materials, services, information and finances into a coordinated flow across all the enterprises, • This integration across the company means that the supply chain functions like a single company satisfying the ultimate customer. • The suppliers in SCM got many advantages in developing ‘partnership’ with customer firms.

  34. Objectives of SCM • Solving supplier’s problems and beyond his level. • Customer service performance improvement • Reduction of pre and post production inventory. • Minimizing variance by means of activities like standardization, variety reduction, etc. • Minimum total cost of operations and procurement. • Product quantity control. • Achieving maximum efficiency in using labor, capital and plant throughout the company. • Flexible planning and control production.

  35. Supply Chain Characteristics Service response Integration of information Technology assimilation Workflow coordination Synchronization The trust Quick response Efficient customer response

  36. Advantages of SCM • Benefits to the customer: • The benefits the customer will get by dealing with a well-managed vendor due to an effective supply chain organization are as follows: • Improved customer service through fewer shortages. • Improved product cost. • Better delivery performance. • Quicker response to changes in demand. • Optimal purchase cost due to possibility of long-term purchase contracts.

  37. Advantages of SCM • Benefits to the company • A company with a well functioning supply chain organization has the competitive edge. • It is capable of satisfying customer needs for flexibility, competitive price, quicker response time and shorter lead times. • The company gets the following benefits: • Reduction in tied-up capital and administrative costs due to reduction / elimination of inventory at all levels. • Reduction in time and money lost through production line stoppage. • More flexibility in planning. • Sustained growth of sales and company business. • Increased shareholder value.

  38. UNIT 3 RECENT BUSINESS STRATEGY AND GLOBALIZATION

  39. MODERN CONCEPT OF BUSINESS • The modern concept of business is more progressive, liberal and consumer oriented. • There is a modern concept of consumer – centered / service – orientation to business activities. • It starts and ends with the consumer

  40. Features of modern business • Large scale production and distribution of goods and service • Mass production and mass marketing • Diversification and globalization of business • Decentralization of production and E-commerce techniques of marketing

  41. Features of modern business cond… • Cutthroat competition at national and global levels on the basis of cost, quality, attractiveness and publicity to products and services. • Extensive use of computers and other information technology techniques in business management. • Increasing participation of government in business and widening the scope of regulatory role of the government.

  42. Features of modern business cond… • Emergence of consumerism, environment protection movement and consumer protection laws. • Modern business is dynamic. • It is flexible to change due to technological and other factors relating to production activities

  43. Recent business trend • Work anywhere for any body • Big organization no longer needed • Small business undertaking one activity in depth • Work form home • Outsourcing – is partnership with a company who’s responsibility is to resolve any problems. • Globalization of business

  44. Benefits of out sourcing • Cost saving • Leads to lean organization • Responsibility to the outsider • Better controls on quality and schedules • Can be done at several places in the country • Provides flexibility as it can be stopped at any time • Reduced liability • Expansion can be done easily.

  45. Globalization of business • Globalization of business means expansion of business activities to cover the entire world within its scope. • Globalization leads to integration of economies of different countries in a new global economic order. • Globalization is a process of integrating country’s economy with global economy with a view to capturing global opportunities for long term growth and development.

  46. Features of global business • Large scale production and marketing. • Connecting of economies of countries. • Importance of developed countries an MNC’s. • Advantageous for participating countries. • Tough competition among companies. • Important role played by science and technology.

  47. Features of global business cond… • World – wide restrictions on products, technology and capital. • Sensitive nature of global business. • Participation of global agencies. • Interdependence at global level. • Revolutionary changes in manufacturing and marketing concepts.

  48. Need of Globalization • Expansion of production and exports. • Making domestic industries competitive. • Effective utilization of surplus production. • Securing benefits of research and develop activities. • Changed global situation

  49. Benefits of globalization Benefits to participation countries: • Integration of countries. • Faster economic growth. • Transfer of capital and technology. • New global economic order. • Opportunities to expand business and promote exports • Optimum utilization of resources • Higher status

  50. Benefits of globalization Benefits to participating companies / enterprises: • High profit • Benefits of liberal government facilities • Expansion in business activities • Spreading business risks • Better utilization of resources • Raises competitive capacity • Contribution to national economy

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