Production With TQM Chap 3

1|Page
Production Management with TQM
Chapter 3
Supply Chain Management - Supply
chain management is the
management of the flow of goods
and services and includes all
processes that transform raw
materials into final products. It
involves the active streamlining of
a business's supply-side activities to maximize customer value and gain a competitive
advantage in the marketplace.
SCM represents an effort by suppliers to develop and implement supply chains that are as
efficient and economical as possible. Supply chains cover everything from production to
product development to the information systems needed to direct these undertakings.
How Supply Chain Management Works
SCM attempts to centrally control or link the production, shipment, and distribution of a
product. By managing the supply chain, companies are able to cut excess costs and deliver
products to the consumer faster. This is done by keeping tighter control of internal inventories,
internal production, distribution, sales, and the inventories of company vendors.
SCM is based on the idea that nearly every product that comes to market results from
the efforts of various organizations that make up a supply chain. Although supply chains have
existed for ages, most companies have only recently paid attention to them as a value-add to
their operations.
SCM consists of five parts:
 The plan or strategy

 The source (of raw materials or services)
 Manufacturing (focused on productivity and efficiency)
 Delivery and logistics
 The return system (for defective or unwanted products)
1|Page
2|Page
E-procurement (electronic procurement, sometimes also known as supplier exchange) is

the business-to-business or business-to-consumer or business-to-government purchase and
sale of supplies, work, and services through the Internet as well as other information and
networking systems, such as electronic data interchange and enterprise resource planning.
The e-procurement value chain consists of indent management, e-Informing, e-
Tendering, e-Auctioning, vendor management, catalogue management, Purchase Order
Integration, Order Status, Ship Notice, e-invoicing, e-payment, and contract management.
Indent management is the workflow involved in the preparation of tenders. This part of the
value chain is optional, with individual procuring departments defining their indenting process.
In works procurement, administrative approval and technical sanction are obtained in
electronic format. In goods procurement, indent generation activity is done online. The end
result of the stage is taken as inputs for issuing the NIT. ( Notice inviting tender )
Elements of e-procurement include request for information, request for
proposal, request for quotation, RFx (the previous three together), and eRFx (software for
managing RFx projects).
Global Supply Chain the worldwide system that a business uses to produce products or services.
Integral factors of Supply Chain Management
1.People- People are key to supply chain management because they are the core of
organizations. For successful supply chain management, the people involved must have the
skills and knowledge to manage sourcing, manufacturing, storage and transportation of
products. They must have a solid view of the company’s strategic business vision and know how
their role fits into the overall functioning of the supply chain.
2.Processes- The processes in supply chain management are the actions taken with the aim of
satisfying customers. They include all functions involved in the supply chain: sourcing,
distribution, transportation, warehousing, sales and customer service. They also include all
actions performed by external companies that are part of the supply chain.
3.Technology Technology is used in the supply chain to connect people and processes.
However, people involved in the supply chain will not use technology unless they find it easy to
2|Page
3|Page
adopt. Careful selection and implementation of the supply chain technologies a company uses
is essential for supply chain success.
Forecasting
Forecasting is a technique that uses historical data as inputs to make informed estimates
that are predictive in determining the direction of future trends. Businesses utilize forecasting
to determine how to allocate their budgets or plan for anticipated expenses for an upcoming
period of time. This is typically based on the projected demand for the goods and services
offered.
Forecasting plays a vital role in the process of modern management. It is an important and
necessary aid to planning and planning is backbone of effective operations.
Importance or advantages of forecasting
3|Page
4|Page
1. It enables a company to commit its resources with greatest assurance to profit over the long
term.
2. It facilitates development of new products, by helping to identify future demand patterns.
3. Forecasting by promoting participation of the entire organisation in this process provides

opportunities for teamwork and brings about unity and co-ordination.
4. The making of forecasts and their review by managers, compel thinking ahead, looking to the
future and providing for it.
5. Forecasting is an essential ingredient of planning and supplies vital facts and crucial
information.
6. Forecasting provides the way for effective coordination and control. Forecasting requires
information about various external and internal factors. The information is collected from
various internal sources. Thus, almost all units of the organisation are involved in this process,
which provides interactive opportunities for better unity and coordination in the planning
process.
Similarly, forecasting can provide relevant information for exercising control. The managers can
know their weakness in forecasting process and they can take suitable action to overcome
these.
7. A systematic attempt to probe the future by inference from known facts helps integrate all
management planning so that unified overall plans can be developed into which divisional and
departmental plans can be meshed.
8. The uncertainty of future events can be identified and overcomes by an effective forecasting.
Therefore, it will lead to success in organisation.
Limitations of Forecasting:
The following limitations of forecasting are listed below:
4|Page
5|Page
1. Basis of Forecasting:
The most serious limitations of forecasting arises out of the basis used for making forecasts.
Top executives should always bear in mind that the bases of forecasting are assumptions,
approximations, and average conditions. Management may become so concerned with the
mechanism of the forecasting system that it fails to question its logic.
This critical examination is not to discourage attempts at forecasting, but to sound caution
about the practice of forecasting and its inherent limitations.
2. Reliability of Past Data:
The forecasting is made on the basis of past data and the current events. Although past
events/data are analysed as a guide to the future, a question is raised as to the accuracy as well
as the usefulness of these recorded events.
3. Time and Cost Factor:
Time and cost factor is also an important aspect of forecasting. They suggest the degree to
which an organisation will go for formal forecasting. The information and data required for
forecast may be in highly disorganized form; some may be in qualitative form.
The collection of information and conversion of qualitative data into quantitative ones involves
lot of time and money. Therefore, managers have to tradeoff between the cost involved in
forecasting and resultant benefits. So forecasting should be made by eliminating above
limitations.
5|Page

Production With TQM Chap 3

Uploaded by

Copyright:

Available Formats

Production With TQM Chap 3

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Production With TQM Chap 3

Uploaded by

Copyright:

Available Formats

1|Page

Production Management with TQM

 The plan or strategy

E-procurement (electronic procurement, sometimes also known as supplier exchange) is

Importance or advantages of forecasting

2. It facilitates development of new products, by helping to identify future demand patterns.

3. Forecasting by promoting participation of the entire organisation in this process provides

The following limitations of forecasting are listed below:

You might also like