introduction to logistic
TRANSCRIPT
PGDM
LOGISTICS & SUPPLY CHAIN MANAGEMENT
Unit 1 – Introduction to SCM
Reference Books
1.Sople Vinod V, “Logistics Management” 2/E - The
Supply Chain Imperative, Pearson Education, 2009.
2.Ailawadi C Sathish, Singh Rakesh, “Logistics
Management” - Prentice Hall, 2005.
3.Bowersox Donald J, “Logistical Management” - The
Integrated Supply Chain Process - Tata McGraw Hill,
2000.
4.Chopra Sunil, Meindl Peter, Supply Chain Management
– Strategy, Planning and Operation, 3/E, Pearson/PHI,
2007.
5.Coyle, Bardi, Longley, The management of Business
Logistics – A supply Chain Perspective, Thomson Press,
2006.
6.Shah Janat, Supply Chain Management - Pearson
Publication, 2008. Unit 1 – Introduction to Logistics
Unit 1 – Introduction to SCM
Customer is the
initiator and the key
element in the supply
chain.
Elements that directly
or indirectly help fulfil a
customer request
make up a supply
chain.
People carry out
processes using
resources and
technology to ensure
that the goods/service
required by the
consumer reaches
them according to their
specifications.
Supply chain management is a series of planning
and management activities that an organisation
undertakes, to ultimately ensure that goods and
services are delivered to the end-consumer.
What is Supply Chain Management?
SCM – The Integrative Framework
Resource
deposit/growth
Information flow
Goods and services flow
Reverse logistics (returns)
Co
nsu
mp
tion
Product disposal
Mother Earth Converters Suppliers ManufacturersExtractors Distributors End Customer
(Source of funds)
Ore to door cycle
Production/supply
Manufacturing/
assembly Distribution Consumption
Cash flow
Reverse logistics - cash flow
Unit 1 – Introduction to Logistics
Unit 1 – Introduction to SCM
Key Stakeholders in Supply Chain
• Provide raw material/components to the manufacturing company for further process.
Suppliers
• Convert the raw material/components into finished products and send it to warehouses for dispatch.
Manufacturers
• Store the finished products in a safe environment, repack and send it to the various distribution/consumption points.
Warehouses
• Shift the finished goods in a safe and timely manner to the distributors to enable a wider reach for the product.
Transporters
• Intermediaries who purchase large quantities of goods from the manufacturer and then sell it to the retailers.
Distributors
• Important interface between the manufacturers and the consumers. They know the customer’s demands, changes in preferences etc.
Retailers
• They are the people who pay for the goods and consume it. They are the initiators of the entire supply chain cycle.
Consumers
Unit 1 – Introduction to SCM
Objectives of Supply Chain
• The key objectives of a
supply chain are:
Improved customer
value
Satisfaction and
profitability to achieve
differential advantage
Unit 1 – Introduction to SCM
Objectives of Supply Chain
Unit 1 – Introduction to SCM
Evolution of Supply Chain
•The logistics function gave rise to supply chain.
World War II was won by countries whose military had an
efficient logistics system to supply arms, food and medicines
in time to the battle field.
•Today, banks compete for customer base by having a wide and
efficient supply chain network of ATMs.
The supply chain network aids in customer service and
retention.
•Departments functioning in isolation have integrated for visibility,
cycle time reduction and streamlined flow of goods and services.Internal supply chain
Sourcing Production DistributionSuppliers Customers
Unit 1 – Introduction to SCM
Evolution of Supply Chain
Mass Manufacturing
Inventory Management and
Cost Control
Supply Chain Management,
ERP, CRM
JIT, TQM, BPR, Supplier
relationships, Customer
Alliances
1950
s1980
s
1990
s
2000
s
1960
s1970
s
Unit 1 – Introduction to SCM
Key Elements in Supply Chain
Demand
Forecasting
Planning
Procurement
ProductionWarehousing
Transportation
Distribution
Returns
Supply chain
Unit 1 – Introduction to SCM
Logistics activities in the production
processes and service processes channel
Vendor
Stores Inspection Production FG
Distribution
Unit 1 – Introduction to SCM
Value Chain of an Organization
• The competitive strategy and all functional strategies
must fit together to form a coordinated overall strategy.
• The different functions in a company must appropriately
structure their processes and resources to be able to
execute these strategies successfully.
• The design of overall supply chain and the role of each
stage must be aligned to support the supply chain
strategy.
Unit 1 – Introduction to SCM
Basic Strategies to achieve Strategic Fit
• Understanding the Customer and Supply Chain
Uncertanity: Defining Desired cost, Service
Requirements, Unpredictability of demand, disruption
and delay
• Understanding the Supply Chain Capabilities: Unique
SC Design of the Organization
• Achieving Strategic Fit: Restructure the supply chain to
support the competitive strategy or alter its competitive
strategy
Unit 1 – Introduction to SCM
Drivers that determine SCM Performance
SCM
PerformanceEfficienc
y
Responsivene
ss
Unit 1 – Introduction to SCM
Decision Phases in Supply Chain
P1: SC Design
• Long term
• Configuration decisions
• Resources determined
• Facilities identified
P2:SC Planning
• Medium term
• Development of Corporate Strategy
• Configuration Constraint Analysis
• Marketing Promotion, Inventory Policies
P3:SC Operations
• Short term
• Directed towards successful delivery of Customer orders
• Uncertanities are less compared to earlier phases
Unit 1 – Introduction to SCM
Process view of a Supply Chain
Order
•Arrival
•Prod Schdlg
•Mfg &
Shpng
•Receiving
Retail Order
•Trigger
•Entry
•Fulfillment
•Receiving
Customer
• Arrival
•Order entry
•Fulfillment
•Receiving
Order
•Arrival
•Push
•Pull
Unit 1 – Introduction to SCM
Push Pull View
Execution initiated in
anticipation of a
Customer’s Order
Demand is not known and
hence acts based on
Forecast
Execution initiated after
Customer’s Order is
received. Demand is
certain
Unit 1 – Introduction to SCM
Macro Processes of a Supply Chain
SRM
Supply Rel Mgmt
• Source
• Negotiate
• Buy
• Design Collaboration
• Supply Collaboration
ISCM
Internal SCM
• Strategic Planning
• Demand Planning
• Supply Planning
• Fulfillment
• Field Services
CRM
Customer Rel Mgmt
• Market Research
• Sell Products
• Call Centres
• Order Management
Unit 1 – Introduction to SCM
Obstacles in Strategic Fit Achievement
1. Increase in Product Variety – Increase in demand for
Customized Products and Services
2. Decreasing Product Life Cycles – Organizations face
uncertain demands and Manufacturing constraints
3. Increasingly demanding Customers – Demand for
better product at competitive price and best quality
4. Globalization – Removal of trade restrictions enabled
Global players to venture. Due to large number of
players co-ordination becomes more difficult
5. Difficulty in executing new Strategies – Lack of skillful
employees to execute Organizations’ strategies