SUPPLY CHAIN MANAGEMENT

& LOGISTICS(SCML)

PRESENTED BY
MANOJ KUMAR ROUT
ASST. PROFESSOR
DEPARTMENT OF OPERATION MANAGEMENT
BIITM, BHUBANESWAR, ODISHA
 Centralized and Decentralized Supply
Chain
• Centralize Supply Chain:
• Centralize Supply Chain Processes are those that can be managed from a remote location,
can serve multiple sites, and drive synergy by serving multiple sites.

• They provide for less duplication of resources and provide efficiency and effectiveness by
managing key processes centrally.

• Some examples of centralize supply chain processes that can be managed centrally are
shown in below;

SIOP (Sales Inventory & Operations Planning) facilitation

Forecasting
Supplier replenishment planning
Master schedule
Process design & deployment
leadership
Logistics management
Item maintenance
 Decentralize Supply Chain:
• Decentralize supply chain processes can be defined as processes that must be performed in the
plant because they involve physical interaction with the material.

• There processes are the ones where the decision-making is ‘localized’.

• It involves supply chain managers, planners, manufacturing teams, health and safety team and
possibility trade management folks.

• Some examples of the example of decentralize supply chain processes that can be managed
centrally are shown in below;
Receiving/shipping
Assembly
Manufacturing
Material transaction
5S- visual (Sort-Set in order-Shine-Standardize-Sustain)
Plant for every part
Health & safety aspects
Audit & control Process
Trade Management
 Centralized Vs. Decentralized Supply Chain
Centralized Supply Chain Decentralized Supply Chain
 

1) Centralize Supply Chain Processes are those that 1) Decentralize supply chain processes can be defined
can be managed from a remote location, can as processes that must be performed in the plant
serve multiple sites, and drive synergy by because they involve physical interaction with the
serving multiple sites. material.
 

1) Systematic and consistent reservation of 1) Systematic dispersal of authority.

authority.  
1) Communication Flow is vertical 1) Open and Free
 
1) Decision Making is Slow 1) Comparatively faster
 
1) Proper coordination and Leadership 1) Sharing of burden and responsibility
 
1) Power of decision making is lies with the top 1) Multiple persons have the power of decision
management. making
1) Best suited for Small sized organization 1) Large sized organization

1) Implemented when inadequate control over the 1) Considerable control over the organization
organization
 Centralized and decentralized supply chain their
coordination and aligning business activities

• Decision-making in a supply chain network can be performed in a

centralized or a decentralized way. In a centralized structure,
there exists a central authority responsible for decision-making,
whereas in a decentralized structure the individual entities can
make their own decisions.
• In practice no supply chain can be completely centralized or
decentralized and both approaches have their advantages and
disadvantages. Most commonly the strategic decisions are usually
made centrally while operation decisions are decentralized.
• It is beneficial to adopt centralized control and proposed a
mechanism to coordinate the decentralized system so that each
player in the chain is benefited.
 Centralized and decentralized supply chain
aligning for business activities
• As far as concern from a strictly cost perspective, the
centralization or decentralization of all functions do not result
in the lowest cost supply chain.

• In a centralized structure, transportation costs are typically

going to be higher and customer service is going to decrease.

• In a decentralized structure, raw material and operations costs

are typically going to be higher because of redundancy in
staffing as well as lower buying power among commodities.
 Centralized and decentralized supply chain
aligning for business activities
• A hybrid strategy (aligning) is the balance and
combination of both centralization and
decentralization within an organization.

• By centralizing strategic functions such as sourcing

and long-term capacity, and decentralizing
operations functions such as order fulfillment and
shipment handling, global supply chains can
maximize customer requirements while lowering
total supply chain costs as a percentage of sales.
 Demand Forecasting and Management
• Demand Forecasting is predicting the future demand for
products/services of an organization.
• Demand forecasting is a combination of two words; the
first one is Demand and another forecasting.
• Demand means outside requirements of a product or
service.
• To forecast is to estimate or calculate in advance
• It is a technique for estimation of probable demand for a
product or services in the future.
• It is based on the analysis of past demand for that
product or service in the present market condition.
 Why Demand Forecasting?

– To help decide on facility capacity planning and capital

budgeting
– To help evaluate market opportunities worthy of future
investments
– To help assess its market share amongst other
competitors
– To serve as input to aggregate production planning and
materials requirement planning
– To plan for other organizational inputs ( like manpower,
funds and financing) and setting policies and procedures
 The significance of Demand Forecasting:

• Fulfilling objectives of the business

• Preparing the budget
• Taking management decision
• Evaluating performance etc.
 Types of Forecasting:

There are two types of forecasting:

1) Based on Economy
2) Based on the Time Period
 Based on Economy

• Macro-level forecasting: It deals with the general economic

environment relating to the economy as measured by the Index of
Industrial Production(IIP), national income and general level of
employment, etc.

• Industry level forecasting: Industry level forecasting deals with the

demand for the industry’s products as a whole. For example
demand for cement in India, demand for clothes in India, etc.

• Firm-level forecasting: It means forecasting the demand for a

particular firm’s product. For example, demand for Birla cement,
demand for Raymond clothes, etc.
 Based on the Time Period

• Short-term forecasting:  It covers a short period of time,

depending upon the nature of the industry. It is done
generally for six months or less than one year. Short-term
forecasting is generally useful in tactical decisions.

• Long-term forecasting casting: Long-term forecasts are

for a longer period of time say, two to five years or more.
It gives information for major strategic decisions of the
firm. For example, expansion of plant capacity, opening a
new unit of business, etc.
 Demand Management
• Demand Management is one that takes a complete
view of a business.

• It means discovering markets, planning products and

services for those markets and then fulfilling these
customer demands.
•
• It is an integrative set of business processes, across,
not just the enterprise, but across all its trading
partner network ( both customers and suppliers)
 What does Demand Management involve?

• Discovering and understanding your market.

• Establishing your customers’ needs and expectations and what draws

them to your business.

• Challenge of managing what, when, and how a product/service is

designed, made, distributed, displayed , promoted and serviced.

• Doing the pricing and inventory optimization at various levels of market

and channels segmentation.

• Satisfying customers on product, price, delivery and post-sales services.

 Demand forecasting Methods:

Demand Forecasting methods are of two types

which are;
1) Quantitative methods(Time Series Methods)
2) Qualitative Methods(Judgmental Methods)
Quantitative Methods (Time Series Methods)

• Time Series Methods

• 1. Naive approach
• 2. Moving Average Method
• Simple moving average method
• Weighted moving average method
• 3. Exponential smoothing method
 Qualitative or Judgmental Methods:

• Judgmental forecasting methods incorporate based on

Judgement, opinions and subjective probability
estimates.
• Judgmental forecasting is used in cases where there is
lack of historical data or during completely new and
unique market conditions.
• Judgmental methods include:
• Delphi Method
• Market Survey
• Historical Analogy
Delphi Method
 DS Group
• The Dharampal Satyapal Group, is a rapidly growing, multi-
diversified conglomerate with presence in diverse industry
sectors.
• Founded in the year 1929, DS Group has remained committed
towards creating premium quality products and has been
credited with several breakthrough innovations for close to
nine decades.
• The Group has focused on growth & diversification with an
undeterred belief in high standard product, reliability and
transparency.
• The product portfolio of DS Group which includes Spices and
Beverages, Confectionary, Dairy, Mouth Fresheners, Hospitality,
Tobacco, Packaging and Agro forestry.
 Candy rush: How Pulse got it right

• How a tangy innovation made a breakthrough

in the stagnant candy category and clocked Rs
150 crore in the first year of its launch
• A mere drop when seen against the
approximately Rs 7,700 crore that the group
clocked in FY16, but significant considering the
time frame, and the fact that it came from a
hard-boiled candy priced at Re 1.
 Shashank Surana, 29, vice president (VP), new
product development, DS Group.

Rajiv Kumar, vice chairman of the DS Group,

for his R&D team working on the Pass Pass
Pulse candy.
Market Survey Method
 Market Survey Method
1) Surveys. 
2)  Focus groups.
3) Personal interviews
4) Observation.
5) Field trials
 Market Survey Method
Surveys. 
With concise and straightforward questionnaires, you can analyze a
sample group that represents your target market. The larger the sample, the
more reliable your results will be.

1. In-person surveys are one-on-one interviews typically conducted in

high-traffic locations such as shopping malls.
2. Telephone surveys through calls.
3. Mail surveys are a relatively inexpensive way to reach a broad
audience.
4. Online surveys usually generate unpredictable response rates and
unreliable data, because you have no control over the pool of
respondents.  
 Market Survey Method
Focus groups. 
 In focus groups, a moderator uses a scripted series
of questions or topics to lead a discussion among a
group of people.
 These sessions take place at neutral locations,
usually at facilities with videotaping equipment
and an observation room with one-way mirrors.
 A focus group usually lasts one to two hours, and
it takes at least three groups to get balanced results.
 Market Survey Method
Personal interviews. 
 Like focus groups, personal interviews include
unstructured, open-ended questions. They
usually last for about an hour and are typically
recorded.
 Focus groups and personal interviews provide
more subjective data than surveys.
 Market Survey Method
Observation. 
 Individual responses to surveys and focus groups
are sometimes at odds with people’s actual
behavior.
 When you observe consumers in action by
videotaping them in stores, at work, or at home,
you can observe how they buy or use a product.
 This gives you a more accurate picture of
customers’ usage habits and shopping patterns.
 Market Survey Method
Field trials. 
 Placing a new product in selected stores to test
customer response under real-life selling
conditions can help you make product
modifications, adjust prices, or improve
packaging.
 Small business owners should try to establish
rapport with local store owners and Web sites
that can help them test their products.
 Historical Analogy

• Historical Analogy an approach to sales

forecasting in which the past sales results of a
similar product are used to predict the likely
sales of a similar new product.
 Historical Analogy
• Historical Analogy mainly forecast the
demand for a new product, it may be accurate
and cheap. It based on forecast and past data
of any similar or relevant existing product,
then according to the product situation to
develop a best fit forecast.
 Historical Analogy
• A judgmental forecasting technique based on
identifying a sales history that is analogous to
a present situation, such as the sales history of
a similar product, and using that past pattern to
predict future sales.
 Historical Analogy
• This theory is based on a more realistic
assumption, that all business cycles are not
uniform in amplitude or duration and as such
the use of history is made not by projecting
any fancied economic into the future, but by
selecting some specific previous situation.
 Historical Analogy
• This theory is based on two assumptions
• (1) every action has a reaction and
• (2) magnitude of the original action influences
the reaction.
 Forecast by Historical Analogy
 Forecast by analogy is a forecasting method that assumes that
two different kinds of phenomena share the same model of
behaviour.
 For example, one way to predict the sales of a new product is to
choose an existing product which "looks like" the new product
in terms of the expected demand pattern for sales of the product.
 "Used with care, an analogy is a form of scientific model that
can be used to analyze and explain the behavior of other
phenomena."
 According to some experts, research has shown that the careful
application of analogies improves the accuracy of the forecast.
 Example of Historical Analogy
• Forecasting the demand of iPhone 6 phone
cover, can be base on the sales on iPhone 6
phone, forecasting the demand of iPhone 6
will base on the sales of iPhone 5.
 Case study for Assignment
•  Starbucks
• Starbucks is pretty much a household name, but like many of the
most successful worldwide brands, the coffee-shop giant has been
through its periods of supply chain pain. In fact, during 2007 and
2008, Starbucks leadership began to have severe doubts about the
company’s ability to supply its 16,700 outlets. As in most
commercial sectors at that time, sales were falling. At the same
time, though, supply chain costs rose by more than $75 million.

• What are the Supply Chain Cost Reduction Challenges ??

• Describes The Path to Cost Reduction.