 Hello everyone, welcome to this course on supply chain digitization. This course is floated by Indian Institute of Management Bombay and is jointly taught by the three faculty members including myself, Professor Priyanka Verma and my colleagues Professor Sushmita Narayana and Professor Devavrata Das. So we are in the first week and we are trying to understand the fundamentals of supply chain management. If you refer to our previous week discussion, we have tried to understand that what is a supply chain and who are the players who play a critical role in managing any supply chain. Along with that, we have also seen that how one supply chain is different than the other. So we have discussed about oil and gas supply chain, we have seen how a pharma supply chain works. Then we have also seen that how a automobile supply chain is very unique where a large number of suppliers comes together and plays a very critical role in manufacturing one final product. Similarly, we have also seen a new business environment related to e-commerce and we have tried to understand that how a e-commerce supply chain works. So going through those basics, we have understood that not every supply chain is same and thus the challenges are different. We will try to understand that how these challenges need to be addressed and in this particular course, how digitization and data analytics can play a critical role in managing these supply chains better. So before going forward, we have seen in our previous example that there are different type of stakeholders who are involved in managing a supply chain. Here is a broad list of the supply chain stakeholders. It is not necessary that all these stakeholders are present in all the supply chain. So let us see into the role individually. When we talk about the suppliers, the suppliers are majorly related to the provider who are involved in buying and selling the raw materials or components which are required for making a final product. The manufacturers again are the players who convert these raw materials that they have received from the suppliers into finished goods. The manufacturing again is a very big area and involves different type of production processes which can be used for converting the raw material into finished goods. The next stakeholder in any supply chain are generally the transporters which are the logistics provider and are majorly responsible for moving these raw materials from suppliers to the manufacturers or once the manufacturer has made the final product, they move this finished goods to the other part of the world. The distributors are again playing a critical role because they are responsible for the storage of these raw materials and finished goods and depending upon the production cycles or depending upon the schedule, the raw materials and are consumed in the manufacturing environment and similarly depending upon the demands which are required to be fulfilled, these finished goods are moved from the distributors to the next stage in supply chain via the transporters. The retailers are someone who are very closely linked with the customers and they are responsible for selling the finished goods either in the online or in the physical stores. So online industry as we all know, online business has come up recently especially after pandemic and because of that this is again a new type of business which has emerged recently. The consumers are the one or the customers who are buying or using these types of these goods who are using these goods and services and here typically a supply chain ends. Now with the process that we have discussed so far is has started from suppliers to the manufacturers, the transporters are responsible for moving products between the players then to the distributors and finally to the retailers. So these are my suppliers, these are the manufacturers, these are the distributors and these are the retailers where transporters is actually connecting these links together and ensuring that products are moved between these players. But the retailers are the one who are connected with the customers and customers can procure these retailer can get their products directly from the retailers. So typically what we have discussed is called as the forward supply chain. But in today's time when we are trying to ensure that the customers are happy and the requirements are fulfilled it is very important that we keep a check on this. So suppose the customer is not happy with the product and would like to return this product again the supply chain can be seen in the reverse direction where customer returns the product, the product can be collected by the retailer or by the distributor depending upon the network design and it is moved in the backward direction towards the manufacturer. So depending upon the type of returns if it requires some major changes, some major exchange then the product can go till the manufacturer where the manufacturer can offer a new product or if there is some minor repair is required which can be handled by the retailer level or at the distributor level then the product will go till that level the repair can be done on the product and can be returned to the customer. So in today's time to improve the customer satisfaction the returns are also required to be managed appropriately and thus your supply chain are required to be seen with new lenses where these returns are managed appropriately. So we have seen about the forward supply chain and we have also seen about the reverse supply chain. So both these supply chains are playing important role in today's time. Now let us try to understand a basic difference between two terms which are widely used in literature. The first term is about the value chain and the second term is about the supply chain. People are often confused that what is value chain and what is supply chain and sometimes there is a confusion about how this value chain works or how a supply chain works. So we will try to understand these two terms by looking into the definitions and with the help of an example. So when we talk about value chains in value chains the focus is totally on adding value to the products or the services at each step. So this can be done at the planning stage or at the designing stage or in the product development stage and even in the delivery stage. So you can see that the processes remain same which we have discussed. However the value chain is all about how you ensure that the value of the product gets improved in all these processes so that the customer is ready to pay that amount or that value that you have added. And typically the value chain always offers you a benefit related to your competitive advantage. So it ensures any business that how a company is able to perform better compared to its competitor by adding more and more relevant value. However, when we talk about supply chains supply chain mainly focuses on the efficient movement and the delivery of goods and services from the suppliers till the end customer. So it is more about how these products are produced and transported starting from the suppliers till the end consumers and the focus is more on ensuring that the customer is satisfied and the product that the customer needs has reached to them in a right manner. All these concepts are essential in understanding a business operations overall dynamics and interactions with the market so that the things can be accordingly planned and the understanding about value chain and supply chain will help you in managing your process in a better way. So let us see the example related to value chain and related to supply chain. In a value chain suppose we will look into the example of a simple cup of coffee that we can order from a coffee shop. Because the expectation is to get a coffee which is of very high value for the customers the sourcing is done for the high quality coffee beans from the region which is well known or which is famous for this particular brand of coffee. In the next part these coffee beans are roasted to perfection and this can be done in house to see that the quality of the coffee beans remains intact and this can be passed on to the final products. Then when we refer to the when we refer to a coffee shop there is a welcoming store environment is available which tries to provide a comfortable seating and ambience for the customer and thereby attracting thereby attracting the customers to such environment and in the next part for ensuring that the value is adding to the customer service a personalized customer service can be offered where the customization options can also be given to the customers and depending upon their requirement the product can be made which is a cup of coffee. So if you look into all these activities whatever we have discussed so far which is either sourcing high quality of coffee beans or roasting them appropriately or creating an environment for the customer or providing a customized type of product to the customers in all the steps we are trying to add value to this final product which is a cup of coffee where the objective is to enhance the overall customer experience and thereby increasing the value of the product with this additional value which you are trying to offer the coffee shop is able to charge these coffee at a very premium price. Now what is happening in supply chain when we talk about supply chains and let us take a look into this example with a simple smart phone based supply chain. So for making a smart phone the complete focus on ensuring that how these components which are required to make a smart phone is sourced. So sourcing the components such as microchips, screens and batteries are done from the global suppliers because these suppliers which are available which are present in the global environment are well known and are renowned in the given field. Then these components are transported to the assembly plant and these assembly plants can again be located in various locations. So obviously lot of decisions are taken over here that how much quantity of these components needs to be required and to be moved to these different locations depending upon the production plan. Finally the assembly of these components are done at these assembly plants into these smart phones and your final finished code is ready, your final product is ready. Once the final product is ready the focus is all about distributing these finished smart phones to the final retailer stores and thus the retailers are able to sell this product to the customers and these are available in the global manner. If we talk about supply chain in this given example it is trying to ensure the timely availability of the components starting from the beginning and ensuring that the production process is efficient, there is minimal wastage and finally the distribution is done for the global markets to ensure that the customer demand is met for all the company products that they want. So if we see over here in supply chain the focus has totally been on ensuring that how these raw material is obtained and how they are converted into finished codes which is further moved across the different part of the globe to ensure that the customer demands are fulfilled. So both these definitions look similar, the terminology looks same but the meaning or the interpretation of these two terms are very different. So here if we have seen we can make it out that the business has got different focus, some of these companies are trying to focus on providing the product at some minimal cost and some of the companies are focusing on providing products with large variety. So here it is very important that we try to understand the strategy which works behind it with which the company decides about their functioning and which drives the whole supply chain. So here we are trying to introduce a new term called as competitive strategy. So what is competitive strategy if we see it is actually for any company it is all about searching for a favorable competitive position in an industry. The company is striving to achieve a profitable and a sustainable position against all the market forces, this is one of the requirement and if you talk about what are these possible strategies, some companies are focusing on creating a strong brand recognition that is all about offering products but these are coming, these are being accepted because of the brand which is offering them or sometimes it can be on based on economies of scale where the companies are trying to take the benefit of economies of scale. So here if we talk about the competitive advantage in the marketplace, let us try to understand it with different example, how these different example are trying to demonstrate the competitive strategy with which they are working. If we talk about a simple retail supply, retail chain store, retail stain store and we look into their strategy, the strategy what they have adopted is on cost leadership strategy which they are trying to fulfill by offering large number of products and also large volume of products but these products are being offered at the low cost. So this we can see is a cost leadership strategy which is a retail chain store generally adopts and similarly let us pick up one more example which is about smart phones. So if we talk about smart phones, they are trying to offer different smart phones and this difference they bring by introducing new technologies, new systems and the gap between these two new products are generally less. So that is what this appeal to the customers and customers remains hooked up with the new phones being offered in the market and here we can say that the companies are following a differentiation strategy by offering new products on in a time to time basis. The next type of example we can pick up of hypermarkets, hypermarkets are nothing but it is a combination of department stores and grocery supermarkets where you will get all the type of products under one roof and people are happy to visit to these places as their most of their daily requirements and their family needs are taken care over here. So for such hypermarkets which is trying to offer almost all the type of products which are family needs, their strategy is all about focusing on volume sales but again because you are selling products which are high in volume the pricing that is offered is low and that is why because of this part the high volume and low price it is able to attract more and more customers and this is leading to increase in your high footfall. So we have seen three different examples in all these examples if you see the strategies which these examples have focused or which these companies have focused are entirely different from each other and one thing which you can conclude from here again as not all supply chain is same similarly not all strategies for the companies are same they are different and it totally depends on what is a competitive position that the company is trying to make in a given industry and obviously it is driven by the market forces in which they are trying to decide about the strategy. So here based on our last discussion we can see that the companies have got different competitive priorities let us see what do you mean by this. So competitive priorities are nothing but they are the critical operational dimension of processes or supply chain must possess in order to satisfy the customers. They signify a strategic focus on building specific manufacturing capabilities many decisions related to capacity, technology, production process, planning, control etc are dependent on the type of the competitive priorities that is decided by the company. Now it is very important to understand that not all competitive priorities are required to be selected by the company they can select those that are most important to be followed. So here let us look into the competitive capability that can be developed by the companies. Typically we have a list of these competitive capabilities which includes cost, quality, flexibility, delivery and innovativeness. So cost is all about ensuring that the cost incurred at every steps whether it is supply chain, manufacturing or any other process is monitored very closely and the focus is always on ensuring that the product is offered at the minimal possible cost. So here the low pricing strategy can be followed very easily. Quality is another competitive capability where all the products and its processes are performed and ensure that they comply with the specification so that the quality norms are achieved and the product is accepted because of the quality that is being offered with it. The third type of competitive capability is related to flexibility where it is expected from the company that it is able to offer you products different volumes and even with the different product mix which is the company is able to manage very easily. Similarly about delivery performance the competitive capability lies in with ensuring that the delivery is reliable and quick and also the stocks are available as and when the demand comes up. The final competitive capability is about innovativeness which is focusing on how quickly you are able to introduce new product into the market so that the time to market is as low as possible or if any point of time you are trying to implement a new product or a processes in your system how quickly that can be implemented. So this is all different types of competitive capability with the businesses can focus on and depending upon the positions in the market they can plan their processes into this particular capabilities. So once we know our competitive capabilities and also our competitive priorities which can because quality delivery flexibility or innovativeness we need to translate them into the corresponding manufacturing processes and here we are going to discuss the major type of manufacturing processes available and also in which scenario they are being used. The first type is all about managing projects where you can refer to examples like your construction industry or construction of any massive structure like ships, aircrafts or so on. So in this type of manufacturing you can rely on project type of systems. In this the product remains stationary and all the manufacturing processes which are required are brought at the product end. So very simple is all about building a skyscraper. The second one is about job shop where the work centers group similar task or equipment together and the products move through different work centers each focusing on a specific operation. A very simple example is your customer furniture workshop and we can take a we can try to understand this example with the scenario that all not all of us will order the same products. So obviously there will be a difference in our orders and that can be taken care very well with the help of the job shop type of manufacturing processes. The third one is the batch production which is actually taking care of producing goods in batches or groups where each batch will go through the same series of processes before moving to the next step. A very simple example is your baking process where you can make multiple type of items but the steps involved in making that particular batch remains the same. The next process is about the assembly line which are mainly used for high volume production with the standardized items. The all the work processes are following a sequence in this particular process and the products move through different stations but in a controlled manner. A simple example of it is your automobile manufacturing. The last type of manufacturing process if you see is about the continuous process where there is no interrupted flow of material and every flow is uninterrupted and they are following a sequence of steps. They are very common in industries which are mainly dealing with liquids or gases as example which we have seen in last session also is related to petroleum refining. So if you observe with respect to the proposed five with respect to the given five manufacturing processes each approach is trying to offer a unique benefit. So when we talk about projects layout system it works on a single product or maybe lesser volume of the product very low volume of the product but if you refer to their varieties they are very high not every construction project is same there will be some difference with that. So we can see that they are referring to production of simple production of products with low volume but high variety but as we are moving away from project layout system whether it is job or it is batch or it is assembly line or continuous we can see that the focus is changing and it is slowly moving towards more towards standardization. So in order to understand their role of the manufacturing process it typically depends upon the competitive priorities which the businesses own and depending on that the corresponding manufacturing process can be selected. So by selecting the most appropriate organizational approach the businesses can optimize their processes and enhance their efficiency and we can also target on delivering high quality products which is useful for getting the customer demand. So whatever we have discussed if you summarize it up all together and make up this table on the x-axis if you see we have got volume and on the y-axis we have got variety. Now here if we refer to these 5 manufacturing processes that we have discussed the project type of environment will always be linked with those products which has got very low volume like construction projects that we have seen or similar projects whereas in terms of the varieties this is going to be at a very high level. When we talk about job shop again the volume increases the volume is little higher than that compared to the project environment whereas the variety is again significantly high. So in this job shop system we can make it out very easily that the flow of the material in that environment is going to be quite jumbled up because you will be using the similar set of machines and resources for making the variety of the products. When we talk about the batch system a batch system has got higher volume compared to job whereas variety has reduced and that is why this is useful for such business environment which is focusing on making low volume products but multiple products. So here we can have disconnected line flow and the line flow can be dedicated to one specific batch here the next one is your the assembly lines are again used for those production environment where you are making higher volume but the variety offered reduces to a considerable level. And finally we have the continuous systems continuous system has got very high volume but the varieties being considered are very very low. So that is why we can see that in continuous environment the flow of the product also have a continuous flow type. This again if you relate it back to our competitive priorities we can make it out very easily that the production systems that is being selected depends upon the type of competitive priority which the businesses has decided products with a lesser cost. So the focus will be more on selecting a production system which will help you in making products at lower cost. So in this in this mostly assembly line of continuous will be useful whereas if the focus is more on providing unique products or every time there is a different products being offered then obviously we can go for job shop or batch shop or batch type of production system. So we can see that the competitive priorities that are being selected is also linked to the type of production systems and now as we have discussed about our production system we have understood how they both are connected with each other and how the competitive strategy that businesses has decided is being translated to the decision of production environment. In the next stage once we know that what type of manufacturing processes are being selected it is important that we link it with its corresponding supply chain. So both these are interrelated depending upon the manufacturing processes that we have its supply chain can accordingly be decided. So with the previous discussions we know that a manufacturing process can be a job shop type of manufacturing process or it can be continuous flow as well. So we can see that sometimes the focus is more on providing products with huge variety whereas sometimes the product is more on providing with minimal cost. So this we have taken care with the help of the manufacturing processes. Now when we have to take a similar decision with respect to the supply chains then this can be translated into two types the supply chain can be responsive or the supply chain can be efficient. So when we are saying that supply chain is responsive the focus is all on ensuring that the product reaches to the customer in minimum time and as quickly as possible and as per the customer requirement whereas when we say that the supply chain is efficient is all about to ensure that the product reaches to the customer in minimum possible time. So the focus is more about managing your cost in the efficient supply chain part. So here we have tried to link both manufacturing and supply chain together and going forward we have seen that depending upon the competitive strategy the manufacturing processes are being selected and how this is being translated to the supply chain requirement in terms of supply chain being responsive or in terms of supply chains being efficient. So till now we have seen the connection between the competitive strategies and the decision related to manufacturing processes and supply chain. We have discussed little bit on the responsive and efficient supply chain. In the next sessions we will take this discussion further and we will try to understand how these different players work to make your supply chain responsive or to make your supply chain efficient. Thank you. With this we will close this session. Thank you everyone.