LOGISTICS AND SUPPLY CHAIN MANAGMENT

Presented by:DEEPTI

Logistics

• Science of managing (controlling) the movement and storage of goods (or people) from acquisition to consumption.

• Goods: Raw Materials Final products, and everything in between.

• Movement = Transportation (between locations).

• Storage = Inventory, Warehousing (at locations).

Definition by Council of Logistics Management, 1998

• ….is that part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services,

and related information from the point-of-origin to the point-of-consumption in order to

meet customers' requirements.

Logistics – Mission [A Bill of “Rights”]

• Logistics embodies the effort to deliver:– the right product– in the right quantity– in the right condition– to the right place– at the right time– for the right customer– at the right cost

Activities and Logistics DecisionsTransportation

rate and contract negotiationmode and service selectionrouting and scheduling

Inventoriesfinished goods policiessupply schedulingshort term forecasting

Warehousingprivate vs. publicspace determinationwarehouse configurationstock placement

• Facility Locationdetermining location, number

and size of facilitiesallocating demand to facilities

• Customer Service– determining customer wants– determining customer response to service changes

• Materials Handling– equipment selection – equipment replacement– order picking procedures

• Packaging design

• Order Processing – order procedure determination

• Production Scheduling

– aggregate production quantities– sequencing and timing of

production runs

Marketing orientation

(competitive advantage)

Time and place utility

Efficient movement to

customer

Proprietary asset

Natural resources (land, facilities, and equipments)

Human resources

Financial resources

Information resources

Management actions

Planning Implementation Control

Logistics Activities

•Customer Service•Demand forecasting•Distribution communications•Inventory control•Material handling•Order Processing•Parts and service support

•Plant and warehouse site selection•Procurement•Packaging•Return goods handling•Salvage and scrap disposal•Traffic and transportation•Warehousing and storage

Raw materials

In-process inventory

Finished goods

Inputs into logistics

Suppliers

Logistics management

Customers

Outputs of logistics

Components of logistics management :

The Logistics (Strategic) Planning Triangle

Which mode?Which carrier?Which route?Shipment size and frequency?

Where?, How many? What size?Allocation?

Strategy/Control system?How much?Where?

What is a supply chain?

• Raw materials• Suppliers• Manufacturers– WIP

• Warehouses• DCs• Retail outlets

Cycle View of Supply Chains

Customer Order Cycle

Replenishment Cycle

Manufacturing Cycle

Procurement Cycle

Customer

Retailer

Distributor

Manufacturer

Supplier

The Supply Chain

Suppliers Manufacturers Warehouses &Distribution Centers

Customers

Material Costs

TransportationCosts

TransportationCosts

TransportationCostsInventory CostsManufacturing Costs

What is SCM?

• The efficient integration of suppliers, factories, warehouses and stores so that merchandise is produced and distributed– in the right quantities– to the right locations– at the right time

Why Is SCM Difficult?

• Uncertainty is inherent to every supply chain– Travel times– Breakdowns of machines and vehicles– Weather, natural catastrophe, war– Local politics, labor conditions, border issues

• The complexity of the problem to globally optimize a supply chain is significant– Minimize internal costs– Minimize uncertainty

Plan Source Make Deliver Buy

Supply Chain Management – Key Issues

ISSUE CONSIDERATIONS

Network Planning • Warehouse locations and capacities• Plant locations and production levels• Transportation flows between facilities to minimize cost and time

Inventory Control • How should inventory be managed?• Why does inventory fluctuate and what strategies minimize this?

Supply Contracts • Impact of volume discount and revenue sharing• Pricing strategies to reduce order-shipment variability

Distribution Strategies • Selection of distribution strategies (e.g., direct ship vs. cross-docking)• How many cross-dock points are needed?• Cost/Benefits of different strategies

Integration and Strategic Partnering

• How can integration with partners be achieved?• What level of integration is best?• What information and processes can be shared?• What partnerships should be implemented and in which situations?

Outsourcing & Procurement Strategies

• What are our core supply chain capabilities and which are not?• Does our product design mandate different outsourcing approaches?• Risk management

Product Design • How are inventory holding and transportation costs affected by product design?• How does product design enable mass customization?Source: Simchi-Levi

Supply Chain Management – Benefits

• A 1997 PRTM Integrated Supply Chain Benchmarking Survey of 331 firms found significant benefits to integrating the supply chain

Delivery Performance 16%-28% Improvement

Inventory Reduction 25%-60% Improvement

Fulfillment Cycle Time 30%-50% Improvement

Forecast Accuracy 25%-80% Improvement

Overall Productivity 10%-16% Improvement

Lower Supply-Chain Costs 25%-50% Improvement

Source: Cohen & Roussel

The Value Chain: Linking Supply Chain and Business Strategy

NewProduct

Development

Marketingand

Sales Operations Distribution Service

Finance, Accounting, Information Technology, Human Resources

Business Strategy

New ProductStrategy

MarketingStrategy Supply Chain Strategy

Flows in a Supply Chain

Customer

Information

Product

Funds

04/11/2023 08:43:21 AM Source: John Langley, Jr., Ph.D., Georgia Tech

19

“Supply Chain Management” is Much More Than Just “Logistics” !

“Demand Management” “Focal Firm” “Supply Management”

CustomerRelationshipManagement

Demand Planning

Operations(Product or Service)

StrategyOutboundLogistics

Procurement

InboundLogistics

SupplierRelationshipManagement

FinancialResource Management

Supply Chain Integration

SalesOrder Mgt.

Process Design and Management

Project Management

SupplierRelationshipManagement

19Source: C. John Langley, Jr., Ph.D, Georgia Tech, 2002.