 So far we have talked about the physical aspects of a supply chain, the warehouse, the transportation, the flow of goods. But there's also a huge amount of planning of this enormous network that most companies will have. So it starts with understanding that there are different kinds of supply chain. And one way to classify the supply chain is looking at the lead time. How long does it take to move the goods and supply the product? So that's one axis and the other axis is around the demand pattern. How predictable is the demand and how unpredictable is the demand? So let's look at the four quadrants because they need very different kinds of supply chain planning. And they have very different challenges and requirements of infrastructure. Let's start with the left bottom side. So that's a low lead time but it's a predictable demand. So it could be just oil and gas. So it's predictable demand and it's being produced continuously. And therefore it's probably a flow movement. Or it could be the rice coming from the field into the milling, the rice mill. So it doesn't take more than one or two hours for the rice to come from the field into the rice mill. Or the sugarcane from the field to the sugarcane mill. And the demand is more or less stable. The demand for rice or oil and gas or sugar may be quite stable. And that's called a flow. It's a continuous flow. On the other side, let's say you've got a high lead time. So it takes time to get the components. But the demand is predictable. It could be let's say an automotive supply chain. Automotive supply chain don't drastically move. The demand may go from 100,000 Maruti cars to 110,000 to 120,000. Or maybe come down to 115,000 and so on. It doesn't go from 100,000 to 1 million. So it's reasonably predictable demand. But the lead time is high because in a Maruti car or a Hyundai car or a Ford car, there will be 1,000 to 2,000 components. The steel, the sheet steel for the body, the engine blocks, the electronics, the harnessing, which is the wires, the lights, the chrome and the steel parts, the seats, the seat bags, they may have a high lead time. And therefore you get into what is called lean supply chain. And you can get into components and just in time design of the supply chain. And then you get into the right side where the lead time is high. So it takes time. But the demand is unpredictable. So it's not like sugar or soap or shampoos or rice or atta. It's not like a stable car company, but it's an unpredictable demand. And it's got a high lead time. So nobody will then keep it and make it, for example, aeroplanes. Aeroplanes is a very, very expensive item. And it takes years to make one aeroplane. And you never know when the demand for aeroplane will come. It may come from the government, one country. Maybe you're buying some aeroplanes from US or some other country buying the Tejas aeroplane from India. But you never know where the demand will come. Once they come, it may take years to deliver the demand. So then you build those aeroplanes on demand. You don't continuously keep building the aeroplanes. You build it when you get the order. So it's unpredictable demand and high lead time. High lead time basically means you've got time to respond. When you get an aeroplane order or a ship order or a large customized tank order, it takes, you have a lead time of years sometimes. Because the army will not want it overnight or the air force will not want it overnight. So it's high lead time. You've got time to make it. Demand isn't when the government places an order and therefore it's on-demand supply chain. The most challenging is actually the right lower side where the lead time is very low. You want it immediately and the demand is unpredictable. For example, you've got a very expensive car or a plane, an Airbus 380. It has gone from Singapore to, let's say, Sydney. And the plane has broken down. There's one part which is missing. Now every minute that Airbus 380 or the Boeing, large Boeing plane is on the ground, the airline is losing money. But you cannot predict the demand. So you want that spare part as quickly as possible. So the lead time is the shortest possible and you can't predict the demand. And then you use an express supply network. It's also called the Korean network. For example, DHL or FedEx or UPS or Blue Dot. That's called express supply chain. Commonly also called as Korea. And this will be typically, you have to Korea your bio-data for a job and it has to reach tomorrow. Then you use express because I'm going to send your bio-data every day. But when you have to send it, you have to send it for probably the next day. Or an emergency medicine. Someone is almost on a life and death situation. And some medicine has to be brought in within hours. So lead time is very short because there's a life at stake. But the demand is unpredictable. You never know when that illness will happen, when the patient will come. Then you use the express supply chain. So these are the types of supply chain then a company can have. And therefore the next step is you have to plan for the different kinds of supply chain depending on your lead time and your demand predictability. So it starts with demand forecasting. You try to forecast the demand. Sometimes you can't like emergency repairs or emergency medicines. But most of the times you can, sugar, rice, biscuits, soaps, detergents, phones. Most of the time the demand will not be oscillating too much. It will probably be growing gently or declining gently. So you can forecast the demand. But the complexity is that a company may have many kinds of products. And therefore you have to demand forecast for hundreds, sometimes thousands of individual product line. A small size, medium size, large size. Think about let's say a Levi's jeans or lipstick or a fashion bag or a fashion dress. There can be thousands of types of dress. Lipsticks can be in thousands of colors. So you have to forecast and therefore it becomes very complex exercise. So demand forecast once is done, and this is done by the sales people in the company. Based on that the sourcing people will then place order on the suppliers to procure the raw material and the component. And depending on what kind of a supply chain it is, they will order on that basis. At the same time the production people will start doing the production planning. So many cars to be made per day, so many phones, so many laptops, so many kilos of oil, refined oil, so many packets of biscuits or soaps or detergents. Because the production planning also has to be planned. So all of that is in terms of planning, ordering. But then comes the physical aspect of warehousing and transport. Because the warehouse is typically of a certain size. If you order too much, you'll not be able to place it in the warehouse because there's no space in the warehouse. If you have too little then the warehouses are running empty and you are incurring cost on rental because the warehouse is empty. Same with trucking. If your capacity to truck out is 10 trucks a day, chances are you don't want 100 trucks a day when your capacity is 10 trucks a day. But your capacity is 100 trucks a day. You don't have to dispatch plan 10 trucks a day because then you have ideal trucking capacity. So you have to plan the warehousing and the transport. Above all you have to plan your leak times and inventory. Inventory is the kind of product that you have in your facility under your control. So if you have long leak times, you may not want to have too much of inventory because you have the time to supply. So you can hold a little bit of inventory and then as you get more demand you order more inventory because you've got a long leak time. But you've got a short leak time which means you have to supply in a hurry. You may want to hold some extra inventory so that you don't run out of stock. So there's always a balance between inventory and leak time. And all of these goes under supply chain planning and you can imagine it's quite a complex topic. That was the basic planning. But once you've got your base plan in place which means your basic supply chain in place. Which is your network, factories, warehouses, transport capacity, people, IT, etc. You want to keep improving and becoming more efficient and effective. And reduce costs and improve your responsive to the market. So that takes you into the area of supply chain optimization. And you can almost optimize all the pieces of the supply chain. Starting with warehouse and space optimization. If your inventory is so much you don't want warehouse so much. You have to optimize it. But on the other hand if your inventory is so much you don't want a warehouse which is only this little. Because there will not be space in the warehouse. So you always have to optimize your warehouse and your inventory levels. So that there is neither too much space or too little space. The same thing for transport. You have to optimize your transport network. So there are no empty trucks because every empty truck, every empty train, every empty plane, every empty ship or container is a wasted cost. Because it's moving, you're incurring the petrol cost, your assets are blocked, but it's empty. So you want to increase the optimization which means the utilization at the right time in the right capacity with the right products through your entire transport network. And the very sophisticated and standard techniques for optimizing warehousing and transport. Same with inventory and product. If you're selling a lot of large packs, you don't want to be in a situation where you're producing a lot of small packs but don't have enough large packs. Customers wanting a lot of large packs but you have a lot of inventory of small packs. So you have inventory but you cannot meet the demand. So you have to have product and inventory optimization. If customers are wanting red t-shirts, you cannot have a lot of blue t-shirts because then you have inventory but you cannot meet the customer demand. You lose money either way. Same with people. If a warehouse of a certain capacity needs 100 people, you don't want to have only 50 people instead of 100 because the job will not get done and there will be pressure on the warehouse. But if the need is for 100 people, you don't want to have 200 people on the warehouse either. So you have to optimize the roles and the staffing. All of these are very standard techniques but they are very sophisticated tools and techniques involved. And those of you want to make a career in supply chain, I would encourage you to get into more specialized supply chain courses. Looking ahead into the future, especially as more and more data becomes available, so get into the realm of big data. And as you get more and more sophisticated tools driven by artificial intelligence and if you combine lots of data with the abilities of artificial intelligence and algorithmic analysis and support of decisions, you get into the area of supply chain digitization in the coming years. I encourage all of you to look up the McKinsey paper, white paper. It's available on the internet and the link is provided below. But essentially with the advent of big data and AI tools and different other kinds of tools, the expectation from various companies and various analysts and various consulting companies and my own personal expectation is that, as you can see on the screen, lot of the levers of supply chain will be impacted positively. So what are the levers? Lot of times you lose sales. You lose sales because you have not been able to fulfill the order and you have lost sales, not been able to fulfill the order because the inventory is not there or the transport takes too long or the product is spoiled. And then as you analyze the data and you sharpen and optimize your supply network, like I talked before, you can reduce the percentage of sales that you are losing, which means you get more sales without doing anything extra. Same with transportation and warehousing cost. If you optimize, again as I've said before, your transport and warehousing with more and more data that's coming up and more and more tools that are coming up, again you can reduce the cost of warehousing and transport. The same with administration cost. Where does the admin cost get saved? The cost of errors. Instead of sending product A to customer B, you have sent product C to customer D. So there's an error. And there's a cost to that error because product has to come back and the correct product sent. So there's the admin cost. There's probably lost sales, etc. So admin cost comes down. Above all, inventories. If you forecast your demand better, you can have cascading effect of lower inventories, better response time, reduce loss of sales, optimize transport, optimize warehousing, and overall improvement in your service efficiency, your profitability. That's a roadmap into the future. We come to the next reflection point. In a course journal, please think about what I've said and try to reflect on when you're traveling the next time, look out for cargo transport. They can be a small auto. It could be a truck. It could be a train. It could be a ship. It could be a plane. But don't look at only the big movements of good. Look at the last mile delivery. When you're passing your neighborhood store, look for how the store is getting supplies. Someone, a small truck or a small auto, which is delivering to the store. Think about how you are getting your food delivery. From a swiggy, your isomato, or Danzo, or Licious, or e-commerce, any of the e-commerce, Amazon, or Flipkart, or Nica. So think about the last mile delivery. And if you want to look back into a little bit of history, do an internet search on palletization and containerization and how we transform the supply chain in the last few decades. And do a search also on digitization and the use of artificial intelligence, et cetera, in supply chain in the next decade. So reflect for three minutes. Now let's look at what are some of the skills you should build if you want to build a career in supply chain. They're technical skills, such as demand forecasting. They're very sophisticated techniques of demand forecasting. And now the artificial intelligence tools have come in which can help you do better demand forecasting. They're also data analytics tools because you get a lot of demand of customer data. Imagine a company which has got millions of customers delivering to hundreds or thousands of delivery points, but having tens or hundreds of production points. And imagine the kind of data that's crisscrossing. So you've got tools for data analytics. If you want to build a career in warehouse or transport management, which are very, very sophisticated skills nowadays, you can study warehouse management or transport management. There's a lot of money spent on warehousing and transportation by the companies. And if you can optimize them and reduce the cost, it has a real impact on the company's profitability. And of course people management, supply chain inherently employs a lot of people, millions of people. And if you are a supply chain manager, you need to develop your people management skills. And remember, all the people in the supply chain are not all highly educated or graduates. A lot of the people in the supply chain are probably semi-literate or sometimes not even literate because they're loading and doing some manual activities. And as a leader, you have to manage the highly educated, the semi-educated, and sometimes they're not so educated. So these are the skills which you should try to acquire by doing additional specialized courses in supply chain if that interests you and build the skills that you see on the screen. With that, we come to the end of the module. Thank you. Namaskar.