21st Century Logistics

Logistics

♦The process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirement

What is Supply-Chain Management?Defined♦ Supply-chain is a term that describes how

organizations (suppliers, manufacturers, distributors, and customers) are linked together

♦ Supply-chain management is a total system approach to managing the entire flow of information, materials, and services from raw-material suppliers through factories and warehouses to the end customer.

♦Supply chain management is the paradigm that is changing business and business relationships. It reflects the realization that the product pipeline for a business extends from the vendor right through to delivery to the customer. This makes managing such a supply chain a joint effort of suppliers and customers to develop and exploit the savings, service and benefits of SCM.

SUPPLYER FIRMPLAN > SOURCE > MAKE > DELIVER

CUSTOMERS

INFORMATION

MATERIALS

FUNDS

FLOWS

Key DISTRIBUTOR

Sub DIST

RETAILER

RETURNS.AFTER SALES

SERVICES.REFUNDS.

WARRANTE.ETC

WAREHOUSE

INBOUND TRANSPORT

OUTBOUNDTRANSPORT

PRO

CES

SES

/ STA

GES

REVERSELOGISTICS

RAW MATERIALS

WORK IN PROGRESS

FINISHED GOODS

Bill of “Rights”

♦ …………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

Suppliers. Materials management .

Distribution management.

Customers. Manufacturing management.

Material control

Production. Sales. Distribution. Purchasing.

Plan. Plan.

Customer mgt. Processes.

Internal supply chain mgt. Processes.

Suppliere mgt. Processes.

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Functional silos, each function protects its turf.

Functions lead business activities.

Suppliers not important, Customers dictated to on trade terms.

Effectiveness of individual functions more important than that of whole chain.

Some functions integrated internally.

Some processes established, but functions still dominate business activities.Suppliers considered important, but dealt with at armslength mostly.

Customers “pushed” to buy.

Core processes lead business activities. Each process a customer of previous and a supplier to next process. Planning process is link and balance between processes.

Cross-enterprise processes integrate suppliers and customers.

Effectiviness of whole chain more important than individual function effectiveness.

Material flows.

Information/finance flows.

Information/finance flows.

Information/finance flows.

Material flows.

Material flows.

Where is ONWARD in this grid???

♦ SCM therefore: (1) takes into consideration every facility that has an impact on cost and plays a role in making the product conform to customer requirements from supplier through to consumer.

♦ (2) SCM should be efficient and cost effective across the entire system. The approach should be a system wide approach and not just minimizing cost.

♦ (3) SCM revolves armed efficient ingemination of all stakeholders; it therefore encourages all the firms activities,firm strategic-Tactical- Operational levels.

♦ STRATEGIC LEVEL: Deals with decisions that have a long lasting effect on the firm i.e. decisions regarding the number, location, and capacity of warehouses and manufacturing plants and the flow of material through the logistics network.

♦ ♦ TACTICAL LEVEL: Includes decisions which are typically updated

anywhere believes once every quarter and once every year i.e. purchasing and production decisions inventory polices and transportation strategies including the frequency with which customers are visited.

♦ OPERATIONAL LEVEL: Refers to day to day decisions such as scheduling lend time quotations routing and trust loading.

KEY DECISION ISSUE IN SUPPLY CHAIN MANAGEMENT IS

♦ (a) Distribution network contribution♦ (b) Inventory control♦ (c) Distribution strategies♦ (d) SC integration and strategic partnering♦ (e) Product design♦ (f) Information technology and decision- support

system ♦ (g) Customer value♦

SCM Challenges♦ SCM integration is difficult for two main reason

– (a) Different facilities in the SC may have different conflicting objectives.

– (b) The SC is a dynamic system that evolves over time.

♦ ♦ If some firms have improved SC performance by focusing on some SC

techniques, what inhabits other firm from adopting the same techniques to improve their SC performance?

♦ (a) The SC is a complex network♦ (b) Matching supply and demand is a major challenge.♦ (c) System variations over time

♦ (d) Many supply chain problems are new

Benefits of Supply Chain Management♦ Mitigates bullwhip effect♦ Improved customer service (internal &

external)♦ Eliminate redundant processes♦ One point concept♦ Reduces wastages ♦ Reduces inventory level ♦ Impacts positively on the bottom line

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