Supply Chain Management for Banks

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Supply chain management is the combination of art and science that goes into improving the way your company finds the raw components it needs to make a product or service, manufactures that product or service and delivers it to customers.

The following are five basic components for supply chain management.

1. Plan-This is the strategic portion of supply chain management. You need a strategy for managing all the resources that go toward meeting customer demand for your product or service. A big piece of planning is developing a set of metrics to monitor the supply chain so that it is efficient, costs less and delivers high quality and value to customers.

From Banking prospective, it's developing a new loan or retail product. Let us say, Credit Card (revolving loan credit product) linked with Fixed deposit customer.

2. Source-Choose the suppliers that will deliver the goods and services you need to create your product or service. Develop a set of pricing, delivery and payment processes with suppliers and create metrics for monitoring and improving the relationships. And put together processes for managing the inventory of goods and services you receive from suppliers, including receiving shipments, verifying them, transferring them to your manufacturing facilities and authorizing supplier payments.

From Banking prospective, for credit card product that we are exploring requires team of product managers and business analyst who come up with feasibiliy study, business plan and return figures as well as marketing strategy. Most important is the selling agent empowerment plan, card vendor, authroisation and issuance related IT components.

3. Make-This is the manufacturing step. Schedule the activities necessary for production, testing, packaging and preparation for delivery. As the most metric-intensive portion of the supply chain, measure quality levels, production output and worker productivity.

From above banking product, going into bits and bytes of IT and busienss. Gettign the action plan into action. Marketing and branding for the product and putting the back office process to ensure that, customer application is processed and customer gets the credit card at his door step. Most important is making customer use it " That's trick of trade". Stage is ready for the Roll.....

4. Deliver-This is the part that many insiders refer to as "logistics." Coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to get products to customers and set up an invoicing system to receive payments.

For above banking product, it means getting the Credit Card application from differnet channels like Web, ATM, Direct selling and other outlets. Ensuring that, bakc office process designed are getting the inputs as planned.

5. Return-The problem part of the supply chain. Create a network for receiving defective and excess products back from customers and supporting customers who have problems with delivered products.

For above banking product, it means rejection at application level, post product delivery, post usage (Customer feels billing is imporper) for the Credit Card.

For a more detailed outline of these steps, check out the nonprofit Supply- CChain Council's website at www.supply-chain.org.

Credit card product is more than that but, considering SCM fundamentals, credit card is nothing but getting the FD customers (To averse the risk) and converting this customers into credit card holder who use the card.

Banking sometimes I feel is nothing ut SCM where, depositors are the Suppliers created in the form of Retail and corporates keeping their money in different forms and Borrowers are the customers gettign this fund and returning it also. The difference comes here which differentiate Manufacturers from Bankers as Bankers make the money on both the side of Chain. Thus, somebody has well said.

"Bankers are the guys who lends you umbrella when it's Sunlight (Summer) and takes it back (Banks like HDFC Bank snatches) from you when it is Raining"

One of the strong reason is I noticed that, bankers offering ATM card and Debit card free in Welcome Kit but, they don't issue Credit Card. One of the reason might be they feel keeping customers money is safer than lending money.