1. SUPPLY CHAIN
MANAGEMENT IN
AUTOMOBILE INDUSTRY
2015
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
BUDGE BUDGE INSTITUTE OF TECHNOLOGY
BUDGE BUDGE, KOLKATA-700137

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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 supplier’s supplier to the customer’s
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 OrderCycle
ReplenishmentCycle
Manufacturing Cycle
Procurement Cycle
Customer
Retailer
Distributor
Manufacturer
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,
Manufacturing and
Replenishment cycles
Customer Order
Cycle
Customer
Order Arrives
PUSH PROCESSES PULL PROCESSES
 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:
OrderSize
Time
Source: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998
Customer
Demand
Production Plan

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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” (Armʼs 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 world’s 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 ANDLEAGILESUPPLYCHAIN
Combinationof leanness and agility within the scope of one firm or a single
supply chain can be calledas ‘‘leagility”.Naylor et al. defined leagilityas “the
combinationof the lean and agile paradigm within a total supply chain strategy
by positioningthe decouplingpoint so as to best suit the need for responding
to a volatiledemand downstream yet providing level scheduling upstream from
the decouplingpoint”. The part of the supply chain towards that satisfies the
customer orders and the part of the supply chain based on planningis
separated by the decouplingpoint. The decouplingpoint also acts as the
strategic stock holding pointbetween fluctuating customer orders and product
variety and smooth productionoutput. On the downside of the decoupling
point is a highly variabledemand from the customer side for high variety,
whereas on the upside of the decouplingpoint the demandis 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 world’s 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.