Supply Chain Management Concepts Quiz

Operations Planning & Control

• This course covers operations planning and control.
• The presenter is Dr. Aditya Kumar Sahu, from IIM Rohtak.

Why a Firm Exists?

• Firms exist to create value.
• Value is created for customers, employees, suppliers, and other stakeholders.

Two Major Dimensions of Management

• Respond to external environmental changes and allocate resources to improve competitive position.
• Implement internal responses to new action programs, aiming to enhance the firm's competitive advantage.

Factors Shaping Choice of Strategy

• External Factors: Economic, societal, political, and government regulations; Competitive conditions and industry attractiveness; Company opportunity and threats.
• Internal Factors: Company strengths and weaknesses; Competencies and capabilities; Personal ambitions and business philosophies of key executives; Shared values and company culture.
• The mix of these factors determines a company's strategic situation.

Tests of Best Strategy

• A good strategy boosts company performance.
• Key performance indicators for a successful strategy include profitability and competitive strength in the long term market position.

Competitive and Supply Chain Strategies

• Competitive strategy defines a company's target customers.
• Walmart's strategy focuses on high product availability and reasonable prices on mainstream products.
• Walmart provides good value for money

Functional Strategies

• Product development strategy determines the product portfolio for development.
• Marketing and sales strategy outlines market segmentation, positioning, pricing, and promotion.
• Operations and supply chain strategy defines material procurement, transportation, manufacturing, distribution, follow-up service, and whether processes are in-house or outsourced.
• All functional strategies should support the overall competitive strategy.

Supply Chain Strategy

• Supply chain strategy defines the structure of the supply chain, with elements such as supplier strategy, operations strategy, and logistics strategy.

Operations Planning & Control Zone

• Operations Planning and Control involves Finance, Accounting, Information Technology, and Human Resources.
• These areas work in conjunction throughout the value chain (New Product Development, Marketing/Sales, Operations, Distribution, Service).

Implied Uncertainty (Demand and Supply) Spectrum

• Predictable supply and demand (e.g., salt at a supermarket).
• Predictable supply and uncertain demand (e.g., an existing automobile model).
• Uncertain supply and demand (e.g., a new communication device).

Need for Operations Planning & Control

• Demand varies across different customer segments regarding quantity needed per lot, response time, product variety, service level, price, and desired rate of product innovation.

Supply Web Diagram

• Displays the interconnectedness of suppliers, manufacturers, distributors, retailers, and customers in a supply chain.

Value Chain vs. Supply Chain

• This section discusses the differences between these two concepts.

The Objective of a Supply Chain

• Maximize the net value generated.
• Supply Chain Surplus = Customer Value - Supply Chain Cost.
• Effective supply chains manage product, information, and fund flows to maintain high product availability to customers while keeping costs low.

Supply Chain Profitability

• Illustrates the profitability calculation where revenue from customer purchases is compared with the costs incurred by the supply chain.
• The difference represents the supply chain profitability.
• The profit is shared among various stages of the supply chain.

Make in India

• Transform India into a global manufacturing powerhouse.
• Make in India & Sell Anywhere is the vision.
• Launched on September 25, 2014, the initiative is marking 10 years in 2024.
• While aiming to reach a 25% manufacturing GDP share by 2022, the actual achievement has fallen to 15.9% in 2023-2024.
• 'Make in India 2.0' covers 27 sectors and strives for renewed vigor.
• Sectors focus on both manufacturing and services including Aerospace, Automotive, Pharmaceuticals among all.

Manufacturing Sectors

• A list of specific manufacturing sectors.

Service Sectors

• A list of specific service sectors.

Main Objectives of Make in India:

• Increase manufacturing sector growth to 12-14% annually.
• Create 100 million new industrial jobs by 2025.
• Increase manufacturing sector's contribution to GDP to 25%
• Attract foreign direct investment.
• Promote sustainable manufacturing practices (Zero Defect Zero Effect)

Pillars of Make in India

• Ease of doing business is considered crucial for entrepreneurship.
• Measures are implemented to enhance the business environment (conducive for startups and established enterprises).

India's Rank in Ease of Doing Business

• India's rank in Ease of Doing Business has improved from 142 (2014) to 63 (2019) according to World Bank's Doing Business Report (DBR)

Tax Reforms (GST)

• Goods and Services Tax (GST) unified India's states and union territories into a single market, simplifying transactions.
• Reduced production costs by lowering GST rates on certain products from 28% to 18%, enhancing efficiency and productivity.

New Infrastructure

• Developing industrial corridors and smart cities, integrating modern technology for high-speed communication are focused on, aiming to generate world-class infrastructure.
• Improvements in administrative processes like registration systems and intellectual property rights (IPR).
• Workforce development for relevant skills in industries is emphasized.

PM GatiShakti

• Aims to achieve Aatmanirbhar Bharat (self-reliant India) with a US $5 trillion economy by 2025.
• Multi-Modal Connectivity is emphasized to create a robust infrastructure across 36 ministries/departments.
• Seven key engines drive economic growth, covering Rail, Roads, Ports, Waterways, Airports, Mass transport, and logistics infrastructure.

National Logistics Policy

• Reducing logistics costs and improving India's Logistics Performance Index to rank among the top 25 countries by 2030.
• Leveraging advanced technology, improving processes, and developing skilled manpower is a key element.
• Rolling out a Comprehensive Logistics Action Plan (CLAP).

New Sectors & FDI

• Foreign Direct Investment (FDI) is significantly increasing in sectors like Defence Production, Insurance, Medical Devices, Construction, and Railway infrastructure.
• Easing FDI regulations in key industries encourages international investment.
• FDI inflows in 2021-2022 reached an all-time high of $84.83 billion.

New Mindset

• The government now supports and facilitates industrial growth and innovation instead of regulating it primarily.
• Fostering cooperation between industry and government is the aim.

Production-Linked Incentive (PLI) Schemes

• Aligning with India’s vision of becoming self-reliant (Atmanirbhar), the Production Linked Incentive (PLI) Schemes aimed at enhancing manufacturing capabilities and increasing exports.
• The schemes cover 14 key sectors with investments in cutting-edge technology to increase global competitiveness (over US$26 billion(₹1.97 Lakh Crore)).

Components of Production Planning and Control

• Production: Transformation of raw materials into desired products.
• Planning: Product/service design; Facility/capacity planning; Production scheduling; Manpower planning; Material planning; and quantity planning.
• Control: Monitoring plan implementation, ensuring timely production, managing deviations; output reports; productivity; and rejection rate monitoring.

Factors Affecting Production Control

• Non-availability of materials (shortage).
• Equipment or plant breakdown.
• Changes in demand or rush orders.
• Worker absence.
• Communication and coordination issues between departments.
• Planning cannot always account for all factors.
• Production control methods vary by factors such as nature of operations (e.g., job-oriented vs. service-oriented) & scale of operations.

Objectives of Production Planning and Control

• Efficient resource utilization and cost reduction.
• Consistent product quality and customer satisfaction.
• Enhanced work environment.
• Maximizing market share.
• Increased labour productivity.
• Optimized inventory control through coordination amongst departments.
• Minimizing raw material waste.

Typical Organisation Structure for PPC

• Typical organization structures for production planning and control (PPC) in a firm (e.g., relationship between R&D, Production, PPC, Quality Control, Maintenance, Order Preparation, Material Control, etc.)

Centralised and Decentralized PPC

• Centralized planning works best for large multi-product companies where a dedicated planning staff coordinates production, relieving line functions.
• Decentralized planning brings planning resources nearer to production, potentially boosting efficiency.

Production Procedure Process Flow (with stages and departments involved)

• The flow of materials from initial sales forecasting to final dispatch to customers.
• The initial stages cover sales forecasting, production budgeting, product design, production planning, and authorization of production.
• Production stages include authorization and control, quality control, and evaluation.
• The final stages include finished goods stock management, dispatching to customers, and feedback processes.

Hierarchy of Production Decisions

• Production planning decisions are organized hierarchically (e.g., long-range/strategic planning, aggregate planning, master scheduling, material requirements planning, detailed job shop scheduling).

Demand Forecasting

• Forecasting involves predicting future demand based on past and current data.
• Forecasting is used in many aspects of business including accounts, finance, human resources, marketing, operations, product/service design.

Characteristics of Forecasts

• Forecasts are always inaccurate.
• Long-term forecasts are less accurate than short-term forecasts.
• The complexity of the supply chain directly affects forecast accuracy; longer or more complex supply chains result in higher inaccuracy

Patterns in Data (with illustrations)

• Trend: Data showing an upward or downward pattern.
• Cycle: Data displaying repeating patterns over time.
• Seasonality: When patterns repeat every year

Components of Demand

• Trend: Long-term direction of demand.
• Seasonal variation: Regular fluctuations within a year.
• Random variation: Unexpected fluctuations.
• Average demand: The mean demand during a specified period.

Forecasting Methods

• Qualitative: Executive opinions, Delphi method, sales force polling, customer surveys.
• Quantitative: Time series (Naïve method, moving average, weighted moving average, exponential smoothing); Causal/associative (linear/multiple regression).

Time Series Methods

• Techniques for analyzing and forecasting data based on past trends.

Moving Averages

• A forecasting method that averages a certain number of recent periods to predict future values The calculation is shown

Weighted Moving Averages

• A forecasting method that assigns different weights to past data, giving more prominence to recent values The calculation is shown

Caselets 1 and 2 (Simple and Weighted Moving Averages)

• Data on calculations of different examples related to simple and weighted moving averages

Linear Trend Regression

• The use of least squares method for determining a trend line and forecasting values.
• Equations for the slope and y-intercept of the regression line.
• Illustrative examples.

Simple Linear Regression

• The calculation of slope, y-intercept, and regression equation using given data and examples.

Caselets 3 and 4 (Exponential Smoothing)

• Demonstrating the exponential smoothing method to forecast demand. These caselets utilize illustrative data.

Exponential Smoothing with Trends Adjustment

• Methods for incorporating trend into exponential smoothing forecasts; calculation formulas.

Seasonal Patterns

• Patterns of demand that fluctuate annually or on a repeating basis

Steps for Calculation of Seasonal Index

• Calculating average historical demand for each season; Calculating the average demand across all months (averaging annual demand over the number of seasons).
• Computing seasonal index for each month (dividing average monthly demand by average monthly demand over all months).
• Estimating total demand for next year.
• Dividing this estimate by the number of months for that year, and multiplying by the seasonal index for that year.

Caselets 1, 2, 3 (Seasonal Index and Examples)

• Real-world case study examples.

Multiple Regression Analysis

• Determining a relationship between a dependent and multiple independent variables using regression analysis.
• Formula for multiple regression analysis.

Selecting a Forecasting Method

• Steps in choosing suitable forecasting methods for particular datasets (e.g., horizontal/seasonal patterns, trend patterns).

Forecast Accuracy Metrics

• Measuring forecast accuracy using Mean Absolute Deviation (MAD), Mean Square Error (MSE), and Mean Absolute Percentage Error (MAPE).

Forecast Error Calculation

• Practical application of calculating forecast error using given data; calculations of MAD, MSE, and MAPE for illustrative data.

Summary of Learning Objectives:

• A summarized list of main objectives covered in the class

Thank You:

• A closing message of thanks.

Test your knowledge on key concepts of supply chain management, including GST implementation in India and factors affecting supply and demand. This quiz covers various aspects of regression analysis and customer segmentation within supply chains.