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Lecture 23 : Principle Streams of Supply Chain — Transcript

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0:01[Music]
0:22[Music]
0:25so hello dear students welcome back to
0:26nptl online course on Logistics and
0:28Supply Chain management so in the last
0:31session we discussed about uh the supply
0:34chain aspects when we are talking about
0:36the Product Industry and then how it is
0:39different when we are handling the
0:40services right and the major challenge
0:42for services industry we have seen in
0:44terms of the customized Services we have
0:47to provide because customer is very much
0:50part of your uh production process right
0:53but in case of your product supply chain
0:56customer is not part of your production
0:58process and the other big advantage in
1:01production supply chain is that we can
1:03utilize the you know free time and
1:05produce some inventories and later on
1:07Whenever there will be demand we can uh
1:10you know push that inventory into the
1:12market so that smooth supply chain can
1:14be ensured but on the other hand we have
1:16seen this is as big challenge in your
1:18services industry when you know when for
1:21some time there is no uh customer at
1:24your uh you know shop and then suddenly
1:26customers are coming and then uh you
1:29need to manage the big Q because uh
1:31because in that way maybe you are
1:32limited with your resources as well you
1:34cannot open those many temporary you
1:37know service channels so that it it can
1:39be moved uh very quickly right so in
1:43that way it is again Big Challenge so
1:46now we will uh continue our discussion
1:49on supply chain main concept and we'll
1:51see what are the principal streams of
1:54Supply Chain management right so again
1:57I'm Dr vikas takur assistant professor
1:59Department of humanities and social
2:01sciences IIT kakur so under this session
2:03we'll we'll spend couple of session on
2:06this discussing because this is again
2:07very important part where we'll again
2:10divide the complete supply chain into
2:13three parts right so first stream we'll
2:15see uh so if I'll highlight with the
2:19diagram again very basic diagram again
2:22and again I'm plotting here we have
2:25suppliers here we have manufacturers
2:28co-manufacturers here we have
2:30distribution Network which is reaching
2:32to our end customer right so first
2:34stream talks about this whatever we are
2:38doing here that is your first stream
2:41right second stream talks about this
2:43manufacturing things manufacturer
2:46co-manufacturers all will come in second
2:48stream third stream talks about you know
2:52how we are delivering the finished
2:54product not only driving in between how
2:57we are storing how we are distribu in
3:00shipping all those things under the
3:02third stream right so this concept you
3:05need to keep in mind while we'll go
3:07through this session that we have
3:09divided the three this supply chain into
3:12three different streams right so we'll
3:15discuss the concepts under each stream
3:17in that way and then towards the end
3:19we'll discuss some uh other key concepts
3:23related to Supply Chain management and
3:25obviously uh like we are doing we'll end
3:28this uh discussion as well with small
3:30case
3:31study so already I talked about your uh
3:34all these streams so you can see this as
3:37your first stream then your this is your
3:39second stream and this is your third
3:42stream we'll see quickly just I'll
3:44introduce so uh procurement Supply and
3:48sourcing management the name suggest
3:50that means how we are acquiring the
3:52goods and services so while you are
3:55acquiring the goods and services you
3:56need to Source you need to purchase you
3:58need to ensure the smooth supply of the
4:00supply chain these are some of the
4:02objectives and the other objectives are
4:05when you are ensuring that uh
4:07acquisition of the uh resources in terms
4:10of your goods or services right you need
4:13to optimize the cost that is first point
4:15how cheaply you are getting your
4:17resources that doesn't mean you need to
4:19compromise with the quality you need to
4:22maintain the quality level as well and
4:24then you need to be efficient as well
4:26and then you need to ensure that a
4:30smooth Supply can be ensured through
4:31your this first stream right if anything
4:35goes wrong with your suppliers so how
4:37you will you know come up with your
4:39contingency plans and maybe you will
4:41find out some alternative or if you are
4:44having multiple suppliers only then that
4:46can be implemented talking about your
4:48operation material and production
4:50management simply again says whatever we
4:53are doing in house that production floor
4:54we are all the supplies are coming we
4:57are storing in the storage we are
4:58ensuring the quality of the incoming we
5:01are moving step by step those you know
5:04inventories to the production floor as
5:07and when required maybe all the model we
5:10are not preparing right now we talked
5:12about in every product category we have
5:14different models right so if we'll talk
5:16about iPhone iPhone 15 is coming so
5:19iPhone 15 mini and then iPhone 15 with
5:22the you know uh standard capacity then
5:26you have with enhanced capacity pro
5:28version and those many things are there
5:30as for the screen size and then if
5:32you'll talk about automobile industry as
5:34per the engine capacity color all those
5:37things fuel you are using right the uh
5:41the technology you are using so in that
5:43way those different models you are
5:45preparing maybe on the same production
5:47line where you are repetitively you are
5:50changing from one model to other model
5:52or maybe you are having some few
5:54dedicated production lines two three
5:56production line to produce maybe eight
5:58or 10 models because one dedicated uh
6:01for one model production line assembly
6:03we try to avoid because that much you
6:06know uh demand is coming from the market
6:09or not we need to ensure so otherwise
6:11that capacity will be unutilized so that
6:13we need to ensure through your
6:15production process whatever is happening
6:17within that production floor till we are
6:19packaging that product and our outgoing
6:21Quality Control Department is saying
6:23that as per sampling we have checked and
6:25this final product is ready we can ship
6:28it then up to that we'll see the second
6:30stream how it is working right and then
6:33talking about the third stream which is
6:35you know connecting your manufacturer
6:38with the End customer is your through
6:40your wholesaler distributor retailers
6:43and then you are storing in in between
6:46so all those things will come into
6:47picture right so your transportation
6:49part warehousing Inventory management
6:52how you are fulfilling the order right
6:54and distribution design whether you are
6:56doing Doorstep Delivery or your customer
6:58is coming to your location picking up
7:00the product or customer is placing the
7:02order online or customer is physically
7:05visiting your store but you have to
7:06deliver the product at the customer
7:08doorstep so many different models are
7:10there again we'll talk about that
7:13distribution how we'll design the
7:14distribution Network and each
7:16distribution is having you know effect
7:19on the cost is one part and the services
7:22provided to the customer on the other
7:23part so we'll see how we'll uh um when
7:27we'll discuss different those
7:28distribution uh options Network options
7:32we'll see somewhere how we are you know
7:34going more responsive so cost is also
7:37increasing and then we are if we are in
7:39decreasing the responsiveness so you can
7:41be efficient in that way so that we will
7:43discuss this is all about all three
7:46major streams when we are talking about
7:47the supply chain so under first stream
7:50these are the three basic concepts we'll
7:53try to touch sourcing management
7:56procurement management and Supply
7:57management so first you need to
8:00understand this the flow I have designed
8:01first is your sourcing and it should be
8:04the first step only because sourcing is
8:07developing your stakeholders developing
8:09your supply chain this is the basic
8:11difference when we are talking about
8:12sourcing and procurement sourcing is you
8:15are setting up your suppliers for long
8:18term right then comes once sourcing is
8:21done then you come to your procurement
8:24part purchasing part then you will
8:26repetitively you will keep on placing
8:28the uh you know purchase orders with the
8:31your uh sourced Partners right and in
8:33the end you will talk about the supply
8:36in the first stream how smoothly you can
8:39ensure that supply chain so these three
8:41steps we'll discuss for the first stream
8:44let us talk about the sourcing
8:47management so obviously we need to
8:50identify assess and enlist the suppliers
8:53this is first step of your sourcing so
8:57before going for that long-term
8:59strategic relationship with your you
9:01know sourcing partners are not only one
9:03day activity or one year or 10 years
9:06activity as long as you are in that
9:08market maybe you will try to continue
9:11with the same kind of sourcing partner
9:14because it is not uh efficient and
9:17effective as well when we are talking
9:19about when we are quickly changing the
9:21partners right because when you are
9:23doing this maybe today I'm your partner
9:26tomorrow if you are leaving me I will be
9:28partner with someone of your competitors
9:31right so then you have already shared
9:33your recipe with me so then in that way
9:36you can see how it can adversely affect
9:39your you know way of processing the
9:42things or whatever secret recipe I am
9:45having the access to right so that is
9:47one important thing and then obviously
9:50once it is done you have to ensure the
9:52cost efficient acquisition of the goods
9:54or services whatever you are doing so
9:56usually for sourcing we are doing the
9:58tendering procedures listed sources we
10:02are asking them to you know uh float
10:05their tenders and there they are
10:07highlighting all the terms and
10:09conditions the terms related to pricing
10:11terms related to delivery terms related
10:13to Quality and other things right so
10:16there they are mentioning so this is
10:18again important step when we are talking
10:20about tendering procedure in sourcing
10:23management right so if you have sourced
10:27you have prepared that list care y right
10:30after meticulously uh you have done the
10:32homework then it will provide you
10:35Competitive Edge as I told you this is
10:37your strategic movement this is your
10:40strategic movement anything strategic
10:42that means long-term effect on your
10:45competency will be there in the final
10:47market so in that way you have to ensure
10:50right so types of sourcing quickly will
10:53go through Outsourcing obviously we
10:55discussed when we talked about
10:57Outsourcing the logistics for first
10:59party second party third party fourth
11:01party fifth party sixth party Logistics
11:03we discussed right
11:05Outsourcing when we you know keep on
11:07doing those things we are adding some
11:09extra uh you know Services which being
11:13provided from those logistic Partners so
11:16in case of Outsourcing when we are
11:18thinking that okay we'll go for
11:19outsourcing for this particular
11:20operation let's say packaging is
11:22something I'm not very good with right
11:25so let us Outsource this packaging okay
11:27let us say on our this pen if we are
11:30manufacturing this marker screen marker
11:33pointer so you are printing your uh
11:36brand name on this pen right so printing
11:39I am not expert in that I'm
11:41manufacturing Electronics uh Goods but
11:44printing is something I never heard of I
11:46have never been there how things are
11:48done let us Outsource this right now if
11:51you are Outsourcing that means every
11:53time you will manufacture this pen you
11:55will ship this pen to printing agency
11:58whosoever is your partner and then again
12:00you know Transportation why don't we
12:02call them inhouse they will set up one
12:05facility in our production plant and
12:07then we'll do that is another kind of
12:09Outsourcing still it is Outsource but
12:12that company now has moved within our
12:14house right and they are doing that
12:16obviously for getting those facilities
12:18we'll charge them but this is one model
12:20of Outsourcing when we are talking about
12:22Outsourcing we we go either for uh
12:26backward integration or forward
12:27integration right backward integration
12:30let's say this is manufacturer we are
12:32here manufacturer backward integration
12:35that means now we will acquire our raw
12:38material suppliers right so that is
12:41backward integration let us start
12:43producing our own raw material we are
12:45tire manufacturer why we are taking
12:48steel wires from the steel manufacturer
12:51let us take the direct uh ore from the
12:54core and process that ore and we'll
12:57manufacture the steel wires as well this
12:59is another industry right so we start
13:01acquiring our suppliers not acquiring or
13:04you can start setting up your uh your
13:07own Supply units so this is backward
13:09integration when you are going for back
13:11supply chain forward integration like
13:15earlier what you were doing you were
13:16selling your product through local
13:17retailers or maybe big Bazar or maybe
13:20some other trading partner wholesaler
13:23Distributors are there now you are
13:24setting up your own supply chain like
13:27Dell is doing Del is is directly selling
13:30to the customer where customer is
13:32visiting Dell store room they are giving
13:35their specification D is designing as
13:37per that and then shipping uh giving you
13:40delivering you the final product right
13:42so that is forward integration anything
13:44you are doing with this forward supply
13:46chain that is forward integration
13:48insourcing is example which I talked
13:51about that uh in house let us Outsource
13:54to someone right but that was internal
13:57party here internally if within our
14:00manufacturing facility let's say we are
14:01manufacturing home appliances now
14:03plastic part is something let's say we
14:05have the molding facility as well where
14:08we were producing earlier the molding
14:09components let's say if we are Flips
14:12manufacturer we are having molding
14:14facility maybe other earlier we were not
14:17manufacturing our products under flips
14:19brand right now so earlier we were just
14:23in our molding plants we were supplying
14:25to uh hbls we were supplying to L&T we
14:28were supplying to
14:29all other players in the market all the
14:32plastic parts which are you know uh
14:34produced in our molding machines but now
14:37we realized we have molding capacity
14:39right let us start our production So
14:42within house you are Outsourcing your
14:44all the plastic related components
14:46production to the molding plant plant
14:48one is molding plant plant two is your
14:51where you are assembling the uh those
14:54products right your uh uh home
14:57appliances where maybe this this is not
14:59only one component you you are using for
15:01manufacturing that appliances maybe many
15:04other components coming from other
15:06suppliers but that one component your
15:08plastic components are coming with from
15:11within only near sourcing is when you
15:15want to implement just in time that can
15:17only happen whenever product is required
15:19you can ship that so many of the
15:21organizations they are setting they are
15:24asking their uh raw material supplier to
15:27set up their production houses near to
15:29their facility and they are ensuring
15:31that we will feed you large enough
15:34orders so that economies of scale can be
15:36utilized and you will not be in loss
15:38that you have because it is strategic
15:40relationship as long as both suppliers
15:42and manufacturers are in profit only
15:45this this complete supply chain can
15:47survive right it cannot happen that that
15:50suppliers are running under losses and
15:53manufacturer is still making loss that
15:55cannot survive for long run right so uh
15:58not only just in time sometime what is
16:00happening I have seen visited one two
16:02wheeler industry I think PVS what they
16:05are doing for you know if they are using
16:08lights and glass all that in their bike
16:12so you you can see the product is very
16:15fragile that component is very fragile
16:17and if you are transporting through you
16:19long distances maybe scratches may be
16:21there these kind of things can happen so
16:24what they are doing they are asking
16:25their glass manufacturer or the light
16:27manufacturer to set up their facility
16:29near to their uh production house so
16:32that that Justus in time can be ensured
16:34and the quality can be maintained of the
16:36product lowcost country sourcing this is
16:39usually happening if you see uh your u
16:43high cost countries are like you know
16:45European nations or us uh kind of thing
16:49so or if we talk about garment industry
16:52especially where you know most of the
16:54players even Walmart kind of players
16:56they are setting up their you know
16:58production facility in Bangladesh Bhutan
17:01or Nepal these kind of cheap locations
17:03right so in terms of how much you are
17:05spending for producing one unit that
17:07also China is also uh has become because
17:10of their policies that is not low cost
17:12as such right but their policies are
17:15that they have you know lower down the
17:18charges for entry for foreign players
17:20This Is How They are boosting up their
17:21economy so many different policy
17:24measures are there but yes low cost
17:26country if you are getting to produce
17:28that product
17:29you can you know uh save on the
17:32production cost Global sourcing like we
17:35discussed this whole Global is One
17:37Marketplace so you can have access to
17:40range to new range of skills and
17:43resources so in terms of uh if you are
17:47uh sourcing markets you can also Source
17:50right so not only Indian market you can
17:52go forign market and then foreign
17:54suppliers lighting solution China is
17:57best known for providing the the
17:58lighting solution even small single LED
18:02you can just imagine we are using in
18:03torch or we are using in automobile
18:06industry right any electronic comp
18:08electric electronic appliances we are
18:10using at home we are using at at least
18:13one that light emitting diode right
18:15where it is giving the indication
18:17whether it is on or off like that right
18:20so those small components are also
18:22coming from China so they are so good
18:25with that manufacturing you can leverage
18:27on that and cut the cost right and then
18:28quality also they are promising that now
18:31earlier they were known for quantity but
18:33now they are moving towards the quality
18:35as well right so Prime subcontracting
18:38here we are not sourcing everything some
18:41part sub assemblies we are uh
18:44Outsourcing very small example again
18:46let's say for uh uh for you are
18:50manufacturing washing machines so in
18:52washing machine you are using uh one
18:55obviously one board electrical board
18:58like circuit right where you are putting
19:00all the electronic components just to
19:02control the functionality of the washing
19:04machine right so many different
19:06electronic components you are putting on
19:07that board but you are been good with
19:09the manufacturing you never uh seen any
19:12soldering facility how we can go for
19:15that and even if you are doing that you
19:17can just imagine that board is printed
19:19circuit board where you are putting all
19:21the electronic components if anything
19:23goes missing whole machine will stop
19:25working so it is small PCV but is
19:28equally important it will not turn on so
19:30what you will do with that big machine
19:32if that small PCV is not turning on
19:35right so let us Outsource this to some
19:37other company who is specialist in this
19:40field and we can enjoy their services
19:43captive services operation again example
19:46of you can you know partially you can
19:48acquire or wholly you can sometimes go
19:52so in that way you have more control
19:54over the quality as well and security
19:56issues but yes uh that's
19:59uh economies of scale you need to keep
20:00in mind whether you will be able to
20:02generate that much demand or not
20:04Professional Services like uh if you are
20:07coming to me I'm lawyer those Services
20:09you are Outsourcing you cannot do that
20:12of your own but some some people they
20:14they seek for special permission where
20:16they can you know uh fight their own
20:19cases uh that that provision is also
20:21there with some uh limitations right
20:24manufacturing like the example I quoted
20:26phlips is not having any Manufacturing
20:28unit but they have the control over
20:30those co-manufacturer who are producing
20:33product for the Philips right most of
20:35the home appliances are being produced
20:37by their co-manufacturers so vertical
20:40integration forward and backward
20:42integration I talked about when you
20:44acquire your suppliers it is your
20:46vertical integration under backward
20:49integration when you acquire your
20:51forward supply chain distribution supply
20:53chain any player you Transportation
20:55agency you acquire or you start your own
20:57transportation center right so then it
21:00is forward integration vertical
21:02integration is what this and horizontal
21:05integration is when you start acquiring
21:07phlips will start acquiring havs right
21:09in the same industry you acquire your
21:11competitor that is horizontal
21:13integration but in supply chain context
21:15vertical integration is our concern few
21:18or more suppliers obviously uh if you
21:22are having only single supplier what if
21:25something goes wrong with that supplier
21:27and on the other hand and you have two
21:29three suppliers or maybe n number of
21:32suppliers many supplier that means that
21:35quantity will be shared among all those
21:37suppliers so that means you cannot feed
21:40large
21:41orders large order you can feed when you
21:44have only one supplier but the problem
21:46with one supplier if anything goes wrong
21:49at his facility any disaster happens or
21:52any maintenance related things happen so
21:55then that means your whole production
21:57line will stop so so I'm not never uh
22:01supporting single supplier and never
22:03supporting too many suppliers I I'm just
22:05supporting maybe two or three suppliers
22:08and then we can feed the large order as
22:11well we can negotiate on that quantity
22:13cost also quality also if something goes
22:16wrong with one supplier we can shift to
22:19other suppliers and that supplier can
22:21take some time to rectify the errors and
22:24again come up with the strong promises
22:26right this is how we can build up the
22:28strong relationship uh with all the
22:31stakeholders so few suppliers should be
22:34there joint venture maruti Suzuki you
22:37best example where you can uh leverage
22:41the supply chain of uh maruti here in
22:44India and Suzuki you can leverage the
22:47technology of that Virtual Enterprise
22:49sometime online you know companies are
22:51there which are doing the survey and all
22:53those things mcki if you are going for
22:55hospitals industry they are doing survey
22:57and then you can find find out their you
23:00know their information their findings
23:02their reports can be very very helpful
23:03when you are designing your insurance
23:06product related to healthcare industry
23:07you are designing Healthcare Services
23:09you are designing Healthcare stations
23:11right facilities so those kind of things
23:13also you can leverage on that coming to
23:16second part under this now sourcing is
23:19done now we'll start you know purchase
23:23uh purchasing the quantity from your uh
23:25soured partner so this will help you to
23:29you know ensure ontime process and
23:32continuous monitoring will be ensured
23:34right so uh after doing all the homework
23:39we decided these many uh two or three
23:43suppliers will be there then we need to
23:45go for the cost also we decided and how
23:48we can be more productive with our
23:50stakeholder it's not only if your uh
23:53sourcing partners are productive in that
23:56way you will get the supplies with
23:57minimum cost C right so procurement
24:00process can be defined as a process
24:02responsible for overseeing and
24:04administering all the activities
24:06involved in acquiring the material
24:08product goods and services which are
24:10required to ensure the smooth operation
24:13efficient operation effective operation
24:16within your production facility right so
24:19repetitively you will procure so what
24:22are the
24:23fundamentals while you are going for
24:25procurement you need to understand first
24:27your purchasing portfolio purchasing
24:30portfolio will help you to understand
24:32what are the products you are buying
24:34what are the quantity you are buying in
24:36what orders you are how frequently you
24:38are buying number of lots you are buying
24:40right size of the lot what you are
24:42buying quality what is expected so if
24:45you know all these things you can be in
24:47better position to negotiate with your C
24:50uh raw material supplier right if you
24:52feeding them large order like what what
24:54Walmart is doing Walmart is saving a
24:58huge use with their raw material
25:00suppliers because they are having
25:01limited suppliers and they are feeding
25:04continuously large orders when you are
25:07feeding large orders those economies of
25:09scale you can reduce you can negotiate
25:11the price as well that is one thing you
25:13need to know organize your purchases
25:16then once you know the pro portfolio of
25:19purchasing right then you can organize
25:22in that way that I will require let's
25:24say uh for one month I need three
25:27deliveries load one lot two lot three I
25:29want this much size lot one this much
25:31size lot two and three right you need to
25:35organize your purchase when the uh
25:37purchase order will be initiated right
25:39when you will generate the PO when
25:41purchase order will reach to your uh uh
25:44your sourcing partner how they will
25:47process everything that information what
25:49is required quantity quality and then
25:52variation in the component what is
25:53required so that also you can organize
25:56then con you need to control the
25:58inventory in terms of either you are
26:00talking about finished goods or raw
26:02material or semi-finished Goods that you
26:05you need to control through procurement
26:07process only if you are keeping too much
26:09in your semi-finished inventory that
26:11means you need to push that inventory
26:13first in the market right otherwise you
26:16never know anything will come like what
26:18happened with bs3 petrol engine and bs4
26:21diesel engines when in Delhi completely
26:24phased out so then there was a rush
26:26among two wheelers four wheelers to sell
26:29those products with you know 50% lesser
26:32price right so that you need to keep in
26:34mind procurement function must be
26:36included in product development is a
26:38very very important part whenever you
26:40are coming with your R&D team and you
26:43are developing new product if you are
26:45including your procurement team into
26:47that what extra benefit you will get see
26:51procurement team is having better idea
26:53which material will be
26:55beneficial they will they can analyze
26:57the performance the quality the quantity
27:00the you know price as well right so then
27:02they have the access how many raw
27:04material suppliers of that particular
27:06material are there available easily
27:08available can we do the just in time
27:10with them can we ensure the quality with
27:12existing raw material suppliers so it
27:14will include in R&D so then then it will
27:18be very beneficial when we are going for
27:20commercializing the same uh you know the
27:23product right risk management and
27:25introduction of performance indicators
27:28so during smooth procurement is
27:31happening you can avoid the risk of
27:33going stock out in your inventory so in
27:37your store always you are maintaining
27:38the inventory and from the store always
27:42the smooth supply of your raw material
27:45is going to the production lines right
27:48so that you can ensure through your uh
27:51when whenever you have that minimum safe
27:53inventory with you identify your
27:55customer needs obviously through R&D
27:58only then you will uh design your
28:01product while your uh your customers are
28:04giving the inputs what are the
28:06requirements look outside your Market
28:09sometimes for some solutions you need to
28:13give you know out out of the box
28:15thinking so then you need to come up
28:18with some new Solutions right so
28:20whatever your competitors have been
28:21doing even the best players in the
28:23market have been doing if that is not
28:25sufficient enough you need to think out
28:27of the box right then manage and
28:29prioritize relationship with your
28:31vendors your stakeholders your suppliers
28:34only then long-term relationship are
28:36possible Right ensure collect spend data
28:39now this is
28:41important you need this is we have so
28:43many different softwares to you know to
28:45do your spending analysis right how much
28:48you are spending be in your you know now
28:50in Mobile also when uh apps are coming
28:54those apps are fetching data from your
28:57uh PayPal PTM or UPI whatever you are
29:00using and then giving you in the end of
29:03the month giving you the complete
29:04information this much you are spending
29:07in uh purchasing the grocery item this
29:10much you are spending in uh your you
29:13know traveling around this much you are
29:15spending for uh getting the fuel this
29:17much you are spending like all uh on
29:21your clothing items this much you are
29:23spending for your household it so
29:24whatever you can do the spending
29:26analysis and then you can say okay I'm
29:28getting the maximum material from this
29:30in Industry how this is this spend data
29:33analysis is helpful if repetitively I'm
29:37giving feeding many large orders to one
29:39player why don't I enjoy that you know
29:42negotiation power with that player right
29:44so that analysis we can do this is one
29:46point there are so many other things you
29:48can do with this spending data right so
29:50you can uh improve your efficiency and
29:54Effectiveness and then if you have that
29:56data you can be at that negotiation
29:59position what are the steps quickly will
30:01go for procurement first you will
30:03identify the source and plan how much
30:05inventry you need to purchase then you
30:08will choose and select the suppliers out
30:10of supplier one supplier two supplier
30:12three I'll pick supplier two this time
30:14or maybe 60% order I'll give to him
30:17maybe then uh rest uh 20% I'll give to
30:21him rest maybe 20% I'll give to him
30:24right why 60% because this supplier is
30:27very responsible price are very less
30:29quality is always high or we are doing
30:33that vendor rating we are rating all our
30:36vendor we'll see one session on vendor
30:37rating if we'll get time so how vendor
30:41rating is helping us to find out which
30:44uh order should be given to which
30:46supplier right and then negotiating the
30:48contract here we are discussing the
30:51quantity terms we want the quality terms
30:55we want the payment how payment will be
30:58done usually we are saying after
30:59receiving the material within 90 days
31:01you'll get the payment these 90 days are
31:03required to you know check in inspect
31:06the incoming quality right and then uh
31:09then then invoice will be generated will
31:12be passed through the accounting section
31:14will be passed through then uh and
31:16finally payment will be done right this
31:17is how it is being done or if any
31:21conflict is there how this will be done
31:24how it will be negotiated then actually
31:26we will place the first order once the
31:28first order copy is generated there you
31:30are documenting every term and condition
31:33in that first order this is another step
31:36accelerating the order let's say now
31:39like the example I quoted that two
31:40wheeler industry bs3 engine petrol
31:43engine were phased out they started
31:45selling on 50% lesser cost but let's say
31:49still our raw material suppliers are
31:50maintaining some inventory for related
31:52to bs3 engines so that means they should
31:55be able to esate that inventory quickly
31:58to the production line otherwise that
32:00will be cost to us if they are supplying
32:03after 10 days it will be difficult us to
32:06again assemble that and push in the
32:08market again we have to lower down the
32:10price right or this is one scenario
32:12another scenario if suddenly one
32:14supplier something goes wrong second
32:17supplier should be able to accelerate
32:18the order should be immediately you know
32:21providing the services if our
32:23forecasting failed sometimes and we are
32:26getting large order we should not stop
32:28saying that we cannot feed after that we
32:31should be able to do that right so that
32:33is one thing then reip and inspection of
32:35the purchase once it is done we will
32:38inspect that material and then if it is
32:40okay we will store that and then move to
32:43the production line after that only
32:45invoice and payment will be done and we
32:48are doing this on time so that the
32:50relationships can be managed so this is
32:53one complete cycle how the procurement
32:55is happening so you can just just see
32:58one example of procurement management
33:00where Construction Company what are the
33:02supplies required right so you need
33:05cement steel and uh all those other
33:09things you you require to you know uh
33:12electrical wiring electrical equipments
33:15all those things are required when you
33:16are coming up with you know no new new
33:18project right so you need to ensure the
33:21smooth Supply only then the uh that
33:24construction can be finished on time
33:26right it's not only the tender will get
33:30the person who is giving the minimum
33:32quat no so the delivery of the project
33:35is also very important and in in that
33:37Way project delay is major major concern
33:40the project management Industries are
33:42facing these days
33:44right so if we'll talk about procurement
33:47versus sourcing I just talked about this
33:49is the first stage where we are
33:51developing the you know supply chain and
33:54procurement involves procuring goods and
33:56services it here focus is what are the
33:59supplies here focus is who is making
34:02those supplies right that is also
34:03equally important part right and then
34:06leverages Supply chains to ensure a
34:08stady flow of inputs and supply to the
34:11organization sourcing is concerned with
34:13building and managing the supply chain
34:15which I talked about procurement is
34:17primarily concerned with already running
34:19Supply chains are there procurement is
34:22just ensuring the smooth Supply but
34:24sourcing is building up new Supply
34:26chains right so now after ensuring your
34:30sourcing is done now purchasing you are
34:33repetitively you know placing the order
34:35with your uh sourced Partners now the
34:38third step under the final step under
34:40your first team is Supply management
34:42which the name suggest that you need to
34:44ensure the smooth continuous supply of
34:47the goods products whatever you are uh
34:51you know uh taking from your suppliers
34:53now see to ensure the smooth Supply you
34:56should have proper integration with your
34:58suppliers integration means
35:00technologically you should be integrated
35:02so that quick information can be shared
35:05if any higher demand is coming from the
35:07market that should be immediately shared
35:10if there you are feeling that there will
35:12be sudden drop in the demand then the
35:15supplier should not produce excess
35:17inventory raw material that also should
35:20be communicated so this is one Element
35:23important element to ensure the smooth
35:25Supply because smooth Supply is
35:27targeting our uh this concept of we
35:31should not stock
35:33out and we should not have excess
35:39stock this will be ensured through your
35:42proper Supply management right and it is
35:44very much function of your preproduction
35:46Logistics and inventory management where
35:49we are targeting our resources whatever
35:52resources we are using should be
35:54supplied smoothly to through our your
35:58first supply chain first stream right
36:01what is the role of Supply management
36:03identifying sourcing negotiating and
36:05procuring a service or good that is
36:08essential to a company's ongoing
36:10operations right so whenever it is
36:12required you need to identify out of the
36:15listed sources you will pick the best
36:18supplier always not you will pick the
36:20best supplier because you need to retain
36:22the suppliers which may be performing
36:25bad on some parameters of price quality
36:28delivery they are struggling to ensure
36:30the smooth delivery but then again I
36:33told you those few suppliers you need to
36:35maintain two three four suppliers then
36:37few word is very subjective Maybe for
36:41One industry few is maybe if you are as
36:44automobile industry you are Outsourcing
36:46tires from mrf right so then only one
36:50you know you you will use in all the
36:53models you will use only one in one
36:55product category if you are using B on
36:57Tire maybe for other product then you
37:00will use that but then if you are
37:02talking about some other thing right if
37:05you are using fuel pump or fuel filter
37:08then it can come from two three
37:10suppliers right so that b you are buying
37:13from b or some other supplier right so
37:15that means this fuel supplier again
37:17subjective related to your uh nature of
37:20the industry we are dealing with then
37:22formulating a strategy for developing
37:24and maintaining a relationship another
37:26very important with the supply Supply
37:27management because your supplies will be
37:32insured and your suppliers are only
37:34accountable for ensuring those smooth
37:36supplies right utilizing technology and
37:38procedures that will help you to
37:40integrate better with your
37:42suppliers and then we need to consider
37:45the theories of supply and demand so
37:47that we can you know fix that price and
37:49we can ensure that smooth Supply is
37:53happening and demand is also generated
37:56in that way so that we will ensure
37:58through your uh supply chain process
38:01right so these all are the uh three
38:04major components when we talk about the
38:06first stream right in the second uh next
38:09session we'll start discussion about
38:11your second stream supply chain so these
38:14are the references for this uh complete
38:17uh topic of uh uh supply chain three
38:20streams right so these are the
38:22references you can refer uh that's all
38:24for this session thank you very much

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