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Lecture 1: What is Supply Chain? | For MBA students/Careers | India - YouTube
Channel: WhatsTheProduct
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hello friends in this lecture we'll be
talking about what supply chain is we
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will be discussing about a basic
definition of supply chain the stages
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involved in a supply chain and what are
the myths about a supply chain so let's
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move on to the next slide so what is
supply chain in layman terms supply
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chain is nothing but a chain of
processes or events that happen just to
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fulfill a customer's need
so from this definition you just need to
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look into two things one is stages and
the other is customers need but
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typically a supply chain has five stages
as you must already be aware of so the
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first stage is the customer the first of
all a customer goes to a retailer to
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purchase a product and retailer provides
the product to the customer so whenever
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retailer is in short supply of a
particular product retailer goes to a
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wholesaler or distributor wholesaler or
a distributor they get their products
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from manufacturers and manufacturers
produce products from raw materials and
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the raw materials are supplied by
suppliers let's take the example of
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reliance fresh stores in India this is
the first stage wherein a customer goes
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to a retail shop and here the retail
shop or the retailer is nothing but
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reliance fresh stores so this is a stage
two and whenever this brand stressed or
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is in short supply of products they are
fulfilled by the distribution center so
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this is the third stage which is
warehouse or distribution stage and
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these distribution centers get the
products from the processing unit which
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is our fourth stage here the
manufacturing stage so instead of
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manufacturing we have processing unit
this processing unit is getting supplies
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from these suppliers first are the raw
materials or raw produce from different
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farmers and second is the packaging
material that is used to pack it all the
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product since
quantities and third is chemical
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manufacturers so this is our fourth
stage the manufacturing stage and this
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is our fifth stage all the suppliers
combined is a fifth stage right and
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there is one more supplier the supplier
of trucks so reliance has its own
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transportation business through which it
supplies trucks for any inbound or
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outbound logistics so this is this is
also counted in suppliers right I think
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of this example explains all the stages
involved in a supply chain
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what supply chain is not so there are
many myths about supply chain let me
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talk about the most important myths so
first one is everyone thinks that supply
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chain is just a movement of a product
from one stage to another I would like
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to clarify that it is not just the
movement of a product it is also the
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movement of information and movement of
funds right this is very important in as
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will be as you know as we will see the
flow of all these three product
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information and fronts in every example
so here this light green arrows show the
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direction of flow of product first raw
materials are supplied by supply of shoe
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manufacturers then manufacturers supply
the material to distributors and
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similarly to retailers and then
retailers supply the final product to
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customers so this is the flow of product
which we are already aware so here you
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can see that you know I have drawn all
the stages involved in the supply chain
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so whenever a customer buys the product
from a retailer he or she pays to the
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retailer in the similar fashion
whenever retailers purchase some
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products from distributors they pay
funds to distributors and then in a
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similar way distributors pay to
manufacturers I think this is very
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obvious also so now it is very obvious
that flow of product is in this
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direction as shown here and the flow of
funds is is in the opposite direction
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so let's talk about a third flow third
flow is the flow of information and flow
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of information has
direction it is unbiased and it flows in
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every direction from one point to
another and it will be explained in the
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next slide through example here I will
be talking about the different flows
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involved across these stages as shown
here in this supply chain right so here
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you can see that whenever a customer
goes to a reliance dress store to
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purchase something as a retailer
reliance fresh store provides the
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customer not just with the product as
well as the pricing and availability
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information so this reliance to provides
the product so this is the flow of
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product in the direction of customer
right along with that you will see that
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there are many banners that actually
show the pricing on each and every
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product and there are banners to show
the discounts and offers that a reliance
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dress store is coming up with so that is
the flow of information information flow
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is represented by I and this was the
product flow let's denote it with B and
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let's say if you want information on a
particular product then you can talk to
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any of the executives so for example
let's say if you want a product and
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you're not able to find it then that
particular executive helps you out and
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let's say if a product is not there then
you can get the information of its next
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availability from the executive so
that's also the inter flow of
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information let me do in order with diet
so now whenever a customer purchases the
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product he or she pees to the Reliant's
tone so that is flow of funds right so
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now reliance provides the point-of-sale
data as well as the replenishment orders
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to the distribution center right so here
you can see that before relator
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gets products from any distributor so
there is a flow of information so
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replenishment orders are the orders that
retailer wants a distributor to fulfill
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that are in short supply in the shop how
do they do it it is nothing but an excel
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file that contains the name of
the products that the retailer is in
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short supply off and and then the
information about how much of each
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product that the retailer wants so all
the orders are fulfilled by the
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distribution center so here you can see
this is the flow of information so now
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whenever this information goes to a
distribution center then they replenish
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the order through trucks so this is the
flow of product
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so whenever reliance fresh store gets a
supply fresh supply from a distribution
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center once they get it they transfer
the points to the distributor so this is
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the flow of funds similarly before the
distribution sends in order to Reliance
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and they send the information of the
delivery schedule and pricing
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information to the reliance fresh store
so this is the flow of information on
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the basis of this information the
reliance makes itself ready to
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accommodate the supply that is coming in
in its warehouse as well as in the store
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itself and then on the basis of this
pricing information Reliance decides the
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offers that are to be given to the
customers so yeah so this is the flow of
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information the flow of information is
very important and it is happening more
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number of times and the flow of funds of
flow of product flow of product happens
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once but flow of information is
happening a number of times I think this
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will be explained in the next example
here let's say a customer wants to buy
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an HP laptop from Flipkart so Flipkart
is an online platform wherein a customer
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goes to its website and places an order
for a product so in this supply chain
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you have customers you have flip cards
website which is acting as a retailer
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online retailer and then flip card gets
its supply from either HP laptop
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distributor or it directly gets it from
an assembly plant which was actually the
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fourth stage manufactured so it'd ie
either gets laptops from then the
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manufacturer itself or from the
distributor so this is the supply chain
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in this case so here let's talk about
the flow so here whenever a customer
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comes to a Flipkart website Flipkart
provides the customer with the pricing
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information on the product the product
variety available and the availability
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of that particular product so before any
other flow there is the flow of
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information again this is represented by
I so yeah after finalizing the product
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customer pays for the particular product
so this is the flow of funds in the
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opposite direction so after the order is
placed
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Flipkart provides the order information
to different sellers just to check which
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seller provides the product faster then
Flipkart engages with the logistics
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provider so that is again flow of
information so that is flow of
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information right so after the seller is
decided it provides information to the
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logistics partner about the order as to
from where it is to be picked up and
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from where it is to be delivered to and
finally through the logistics partner
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the product is delivered to the customer
so this is the flow of product right so
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at each and every stage Flipkart also
provides order tracking at each and
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every stage it tells the customer which
stage the order is in starting from when
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Flipkart as you know has fixed this
seller and then to whether it has fixed
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the logistics partner and then to
whether it has been picked up or whether
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it has been whether it has reached their
warehouse whether it is packed whether
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it is again picked up by the logistics
partners to deliver to the customer so
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that is again flow of information so now
here for order tracking you can see that
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each and every stage is providing
information to Flipkart and then
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Flipkart is providing all the
information to the customer so you can
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see that flow of information is is
unbiased - direction it is flowing from
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from the distributor - finally to the
customer
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it is flowing from the manufacturer
directly to the customer right so here I
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would like to emphasize that the flow of
information is is more important
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compared to the flow of product and flow
of funds right so now the next myth
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about the supply chain some people might
think that at each and every stage there
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is only one player involved there is
only one supplier who is supplying to
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one manufacturer and then the same
manufacturer is supplying to only one
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distributor and then the same
distributor is supplying to only one
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retailer and then to customers so that
is not the case supply chain is a
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complex network there can be many
suppliers many manufacturers many
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distributors supplying to each other and
you know cross supplying for example a
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supplier can supply to just one
manufacturer or it can choose to supply
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to many manufacturers at the same time
or it can even bypass the whole
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manufacturers and it can directly supply
to distributors and similarly
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distributors can directly supply to
customers bypassing the retailer's now
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the structure of a supply chain depends
on whatever the customer needs a company
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wants to fulfill right and then on the
basis of that rules of each and every
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stage is defined I think it looks easier
to talk about it and let's try and
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understand it through another example on
the next slide so again let's talk about
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flip card so flip card has two
structures to supply chain structures to
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fulfill a customer's order so one is the
vert house talking model and then the
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other one is back to back order
fulfillment model so initially when flip
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card started they were following back to
back order fulfillment model wherein
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they don't store any products from any
supplier they didn't have any warehouse
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at that time so in this model what was
happening so whenever flip card gets an
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order from a customer so that order
information is provided to the logistics
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and then logistics pick the product from
the
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and then that product is brought to the
fulfillment center where the where the
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product is checked for quality and it is
packed properly and then it is supplied
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to the customer right so now you can see
that there are many stages involved in
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this model you can see that the
logistics partner is is being you know
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used for two times one to pick the
product from the surplus from the seller
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and then then to deliver it to the
customer
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so now just to supply the product to the
customer in a faster way Flipkart came
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up with their house talking model
wherein Flipkart stocks the inventory
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from various sellers in its warehouse so
whenever Flipkart gets the order from a
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customer and if the order is available
in their warehouse so that order is
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directly supplied from the warehouse so
thereby Flipkart completely bypasses the
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distributor's or the sellers from for
for a particular order and this makes
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the whole supply chain faster and it
helps Flipkart to solve or fulfill the
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customers need in a better way
right so here I think this example has
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made it clear the complex nature of
supply chain and how that complex nature
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is chosen for fulfilling a customer's
need right let's just review the whole
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lecture we learned in a simple fashion
that supply chain is the movement of
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product information and funds across
different stages to fulfill a customers
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need then we explained all the stages
involved in the supply chain and then I
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think you will have a fair idea of how
each and every stage looks like through
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this example we emphasize that it is the
flow of product information and funds
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and not just the flow of product only we
could see that in in a simple supply
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chain you know in there is a flow of
information product and flow and we
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could see that flow of information
matters more compared to other flows and
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then we could see that complex we could
see the complex nature of supply chain
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Network
and the complexity depends upon what
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customer need you want to solve right so
this is it for this lecture so in the
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next lecture we'll be talking about the
objective of a supply chain thank you
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