Hello, everyone. Today, I am discussing on 

Supply chain objectives.

 The main objective of any supply chain is to increase the value. 

 What is the value? 

Value is benefits divided by the cost. 

In such circumstances, marketers are having two options. Either increase benefits or decrease costs. 

What are the major benefits a firm can increase? 

1.       Have a proper order management.

 Indian Railway catering and tourism Corporation (IRCTC) Initially was asking its customers to come to the reservation counter and fill the form to book a ticket. Many customers were not having enough knowledge which train will come at what time and how many seats are available. Later, RCTC has adopted the agent model wherein it has appointed agents who can book tickets. Customers rather than going to the railway reservation counter started booking through the agent. However, the customer has to pay extra commission to the agent. Then IRCTC has begun their own websites.  Thereafter, a customer can book a ticket on the internet. However, a customer has to take the printouts and submit while traveling along with the address proof and ID proof. To reduce this hassle, IRCTC has created a mobile application wherein a customer can book the tickets now and show the SMS to the ticket collector. This is an example of how a company can increase benefits in order management. 

2.     Benefits can be increased through quicker delivery 

Amazon is having the two types of orders one general orders second is the prime orders. In the prime orders Amazon delivers the product within 24 hours from their fulfilment centres. For this Amazon charge premium but a customer gets the product on time.

3.     A company can have better information systems. 

Earlier when a customer books the Courier he was not sure when he will get the courier. Now, companies like professional courier give you the token number or a ticket number through which a customer can track their parcels and couriers and exactly you will come to know when the product will be delivered. 

4.    A good pricing and revenue Management Systems is another benefit.

India post earlier was delivering simple cover and cards but as the competition has grew from courier services, India post also came out with a speed post options for the same size of the card or a cover. For this, India post charges 30 rupees extra.

5.     Increase benefits from the supply chain coordination among members.

 Hindustan Unilever limited (HUL) a major company in FMCG in India have a stricter control on their C&F agents, wholesalers Distributors and retailers to see that products available at every retail store in India. 

In a second option to increase the value of a firm, one can

 decrease the cost. 

So a question is what a cost a firm can reduce. 

1.      Reduce order cost. 

For example, PVR earlier was asking the customer to come to the theatre and book tickets. Added to this, a customer who'd like to book tickets three four days in advance could not do it but now with websites like book my show one can book tickets well in advance. Like this, company like PVR, are reducing their order cost. 

2.    Reduce inventory.

I would like to take an example of a Spanish retailer Zara, known for their fashion merchandising. The company has an inventory turnover of 21days.  This is helping Zara to keep new fashion and reduce inventory.

3.     Decrease the cost of transportation. 

Cement and fertilizer companies were earlier sending their Goods via the truck but it was taking a lot of time to them then they have come out with a railway as an option, which is speedier and also reduces cost to them. 

4.    Reduce sourcing cost. 

General Electric the Pioneer in the call centres has shown the world how a firm can decrease costs. Today, Indian ITES sector depends on Outsourcing activities of American and European companies. Another example is bigbasket.com that sources their merchandise directly from farmers and can pass the cost benefit to customers. This is how forms are adding value in the supply chain. 

5.     Reduce manufacturing cost. 

Today in operation automation word robots and artificial intelligence are playing a significant role in reducing the manufacturing cost. 

The second objective of the supply chain is to 

increase the profitability or commonly known as supply chain Surplus.

 What's the profitability?

 It's the revenue minus the cost. Obviously, there are two questions that come to us are how do I increase the revenue and decrease the cost?

 We already discussed about how we can reduce the cost. Let me give examples of how one can 

increase the revenue. 

It can be increased in three ways. 

1.      Adding the new customers to the company 

Let me take an example of Infosys the company, every year recruit new customers and increase their revenue. 

2.    Increasing volume purchase of customers. 

Telecom companies earlier getting customers recharges worth Rsv20 and Rs 30.However, today customers are charging data packs of 149 199 and 249. This is how companies are increasing revenues. 

3.    In case of the differential pricing 

a company can think about high and low pricing based on the seasons, frequency of purchase, and delivery options.Flipkart, an ecommerce company from India has created their own Warehouse facility at Hosakote near to the Bangalore city. Another company more a subsidiary of aditya birla group has come out with their own private labels. These examples help the company to create the revenue and reduce the cost and increase the value of the firm.

 A firm can have other objectives also in a modern supply chain. There is an emphasis on bringing agility to supply chains. 

Let me take an example of a recent launch of Jiomart, an eCommerce platform of the Reliance. The company has not set any minimum order value. One can order 10 rupees or hundred rupees. Looking at the order level they plan for this scheduling and also the route planning. 

Now the question is how good a firm is to adapt to the demands and be 

agile? 

A company which is becoming agile is surviving the battle in this corporate jungle. 

Companies are improving their functions 

whether it is the storing or sorting or bulk-breaking or distributions. Let me take an example of Asian paints. Customers are demanding varieties of colours today. Therefore, Asian Paint supplies three basic colours to the dealer and also provides a machine that popularly known as colour World machine. Here, a dealer can mix   three basic colours and get whatever colour a customer wants. 

In a summary, what are the objectives of the supply chain?

1.      Enhance the value of the supply chain to increase the profitability. 

2.    Supply Chain  achieve this by increasing the revenue and decreasing the cost 

3.     create a supply chain assets for bring the agility to the supply chain 

4.    Improve functionalities of each stakeholder in the supply chain.