a report about scm & logistics

A Training Report about

Supply Chain Management & Logistics

Supply Chain Management

Organized By:-

Ashutosh Tiwari

CEO, Sherpa Adventure Gear

Chen Pathmanathan

Supply Chain & Logistic Consul-tant

Supply Chain Workshop

Prepare By: Santosh Khadka

INTRODUCTION

1.1 Background of the StudySince logistics advanced from 1950s, there were numerous researches focused on this area in different applications. Due to the trend of nationalization and globaliza-tion in recent decades, the importance of logistics management has been growing in various areas. For industries, logistics helps to optimize the existing production and distribution processes based on the same resources through management tech-niques for promoting the efficiency and competitiveness of enterprises. The key el-ement in a logistics chain is transportation system, which joints the separated activ-ities. Transportation occupies one-third of the amount in the logistics costs and transportation systems influence the performance of logistics system hugely. Transporting is required in the whole production procedures, from manufacturing to delivery to the final consumers and returns. Only a good coordination between each component would bring the benefits to a maximum.

The purpose of this paper is to re-clarify and redefine the position logistics sys-tems through collecting and analyzing various applications cases and practices in logistics from literatures. It is to provide a general framework and expect to be re-ferred for further development and researches. The paper started from introducing the development of logistics and transport-related sectors based on a historical re-view. Afterwards it discussed the interrelationships of transportation and logistics. It expresses the benefits that transportation brings to logistics activities and vice versa. For instance the increase of the efficiency of logistics also would bestead to release traffic load in the urban areas. Furthermore, some major logistics activities and concepts were also discussed in this paper. It especially presents City Logistics independently due to it is considered as a main tendency and an available method of future integration of transport and logistics in the urban areas. Finally, this paper will discuss and conclude the potential further development of logistics systems.

Source: -Proceedings of the Eastern Asia Society for Transportation Studies,Vol.5, pp. 1657 - 1672, 2005.


1.1.1 Concept of Supply Chain ManagementSupply chain management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to con-sumer.

The process of converting an Idea into a saleable , useable product / service ensuring that the right customer receives that service / product at the right time and at the best cost.

Reasons for SCM in SocietySupply chain management is necessary to the foundation and infrastructure within soci-eties. SCM within a well-functioning society creates jobs, decreases pollution, decreases energy use and increases the standard of living. Two examples of the effect of SCM within societies include:

o Hurricane Katrina - 2005In 2005, Hurricane Katrina flooded New Orleans, LA, leaving residents without access to food or clean water. As a result, a massive rescue of the inhabitants had to be made. Dur-ing the first weekend of the rescue effort, 1.9 million meals and 6.7 million liters of water were delivered


o Foundation for Economic Growth

A society with a highly developed supply chain infrastructure that includes interstate highways, a large railroad network, ports and airports is able to trade many goods at low cost. Business and consumers are able to obtain these goods quickly, resulting in eco-nomic growth.

SCM Before

Now, SCM


Marketing Manager – Sell the Product

Operations and Supply Chain – Make and Deliver the Product

Finance Management – Calculate cost and pay taxes

Human Resources – Supply People to get the above done

1.1.3 Component of Supply Chain Management and Logistics


Human Resource Management

Supply Chain

Management

Information Sharing

Product De-velopment

1.1.2 Concept of Logistic Council of Logistics Management (1991) defined that logistics is ‘part of the sup-ply chain process that plans, implements, and controls the efficient, effective for-ward and reverse flow and storage of goods, services, and related information be-tween the point of origin and the point of consumption in order to meet customers’ requirements’.

Johnson and Wood’s definition (cited in Tilanus, 1997) uses ‘five important key terms’, which are logistics, inbound logistics, materials management, physical distribution, and supply-chain management, to interpret. Logistics describes the entire process of materials and products moving into, through, and out of firm. Inbound logistics covers the movement of material received from suppliers. Mate-rials management describes the movement of materials and components within a firm. Physical distribution refers to the movement of goods outward from the end of the assembly line to the customer. Finally, supply-chain management is some-what larger than logistics, and it links logistics more directly with the user’s total


Supply Chain

Management

Procurement & Sourcing

Production & Manufacturing

Logistics & Warehousing

Inventory & Cost Manage-

ment

Customer Satisfaction

communications network and with the firm’s engineering staff. The commonality of the recent definitions is that logistics is a process of moving and handling goods and materials, from the beginning to the end of the production, sale process and waste disposal, to satisfy customers and add business competitiveness.

It is ‘the process of anticipating customer needs and wants; acquiring the capital, materials, people, technologies, and information necessary to meet those needs and wants; optimizing the goods- or service-producing network to fulfill customer re-quests; and utilizing the network to fulfill customer requests in a timely way’ (Tilanus, 1997). Simply to say, ‘logistics is customer-oriented operation manage-ment’.

1.1.4 Situation of Global Logistic ServiceThe heat is turning up on logistics processes as sourcing and manufacturing activities are increasingly being done globally. Companies going global are experiencing unexpected transporta-tion costs, higher inventory investment, andLonger and more unpredictable cycle times, while at the same time their local customers are demanding lower prices, more unique execution, and improved responsiveness. As a result, com-panies are seeking ways to make their Global logistics processes more reliable, more flexible, and less expensive.

Aberdeen surveyed and interviewed more than 400 Global logis-tics and trade managers in 2005 to find out how companies are coping. In November and December 2005, Aberdeen researched companies that are transforming their Global logistics operations to find out the details of how they are achieving improvements.


Out of this research, eight companies were selected as best prac-tice winners, two in each logistics management category: global inventory control, transportation spend management, import/ex-port process management, and Global logistics outsourcing

History and Advancement of Logistics

Logistics was initially a military activity concerned with getting soldiers and muni-tions to the battlefront in time for flight, but it is now seen as an integral part of the modern production process. The main background of its development is that the re-cession of America in the 1950s caused the industrial to place importance on goods circulations.

The term, logistics, was initially developed in the context of military activities in the late 18th and early 19th centuries and it launched from the military logistics of World War II. The probable origin of the term is the Greek logistikos, meaning ‘skilled in calculating’. (BTRE, 2001) Military definitions typically incorporate the supply, movement and quartering of troops in a set. And now, a number of re-searches were taken and made logistics applications from military activities to business activities.

Supply Chain Competitive advantage

Cheaper

FasterSupply Chain Management

Dormant Years Development Year Taker YearsLogistic Alliance 3rd party Logis-tic Globalization Logistics

21st Century1960S – 1970S1950S 1980S – 1990S

Figure 2. Logistics historical development

Better

The logistics manager always considers minimizing the cost as possible from the upstream to downstream. Service should be faster and better to deliver the ship-ments in time because a minute of delay work the company should endure many loses.

Competing through Supply Chain


FasterBetter

Cheaper

Profit

Sales

Cost

Cost Advantage1

Cost is important for all supply chain processes

– That goes without saying.

Low costs in marketplace = low prices or high margins, or a bit of each.

Many products compete specifically on the basis of low price.

Time Advantage 1

Time measures how long a customer has to wait in order to receive a given prod-uct or service.

Quality Advantage1

The most fundamental objective – it is a foundation for the others – is to carry out all processes across the supply chain so that the end product does what it is sup-posed to do.

Defects, incorrect quantities and wrong items delivered

Customer’s loyalty.

Previously a key advantage – Now a necessity.

No Longer an order winner


Supply Chain

Involvement

Supply Chain TechniquesWhat are the factors affecting?

Operations, Transport, Storage, Suppliers Inventory Management

How

• Optimize Inventory

• Reduce Excess un sold inventory• Serve Customer on time and ensure availability• Optimize Transport and Warehouse

• Supplier Development

• Quality – Suppliers / Design , Inspection

Supply Chain TechniquesSupply chain and operations techniques to meet customer demand and reduce in-ventory

JIT / Lean supply chain

Agile Supply Chain

Hybrid Supply Chain

JIT & Lean systemsJust-in-time (JIT) is a strategy companies employ to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs2

Just in time is a type of operations management approach which originated in Japan in the 1950s.

Very predominantly used by Toyota Motors for their production, inventory and scheduling


It adopts the pull system of inventory management rather than the push system3 – Where goods and Services are moved along the supply chain just as they are needed.

Lean System focuses on waste elimination – Waste can also be excess Inventory / unnecessary process – JIT is a part of lean operations

Lean and Waste management

Agile Supply ChainAgile supply chain = customer responsive

Customer Responsive = Reading and Responding to Customers to end consumer demand.

Most organizations today are forecast-driven rather than demand-driven.


• Transport

• Inventory

• Motion

• Waiting

• Over-Processing

• Overproduction

• Defects

The different types of Wastes are:-

Waste can also be classified as non-value added activities that cost the company

Agile -mean FlexibleAgile manufacturing represents a very interesting approach to developing a com-petitive advantage in today’s fast-moving marketplace.

It places an extremely strong focus on rapid response to the customer – turning speed, flexibility and agility into a key competitive advantage.

An agile company is in a much better position to take advantage of short win-dows of opportunity and fast changes in customer demand.

Agile - HowDifferent Suppliers – Same product

Prefer to Pay high prices - Focus on time to deliver rather than economies of scale

locate closer suppliers – Closer to factory the better

Allocate Vendor Managed Inventories – To avoid delays

High Flexibility in Transportation and Operations – 2nd Shifts, Air trans-port Demand management

Adaptable / Flexible product design

Hybrid

Mix of Agile and JITHybrid supply chain strategies recognize that within a mixed portfolio of products and markets there will be some products where demand is stable and predictable and some where the converse is true.


Procurement StrategiesProcurement is the business management function that ensures identification, sourcing, access and management of the external resources that an organization needs or may need to fulfill its strategic objectives. – CIPS Australia


Procurement ManagerYou are what you eat

A body is developed by the food we put in

A company is defined by its supplies

Garbage in garbage out

Procurement Manager ObjectivesIdentify Best Supplier

Cost

Quality

Time to Serve – faster and uninterrupted flow of goods best fit for your organization

Supplier Development

Develop the right supplier to get the best product for the company Part-nership / Integration

Supplier Collaboration

Training Suppliers to be the best fit Aligning Supplier with Com-pany goals

Monitoring and Evaluation

Supplier Relationships


CheaperFasterBetter

Trust and Openness

Advantages of Developing Supplier

Relationships• Increased Productivity & Quality

• Reduced Monitoring

• Increased transparency

• Better Demand Planning

• Win – Win Situations

• Suppler Expertise and Technology

• Reduced over all costs / reduced time to market

Demand Forecasting for Inventory Management


S Sharing of

Sharing of Information

Mutual bene-fits and Shar-ing of Risks

Coordination and Planning

What is Forecasting?Demand Forecasting Process of Predicting a future event based on historical data.

Educated Prediction and Estimation of Demand

Why do we need Demand Forecasting?• Too Much Inventory

• Too Less Inventory

• Production Planning

• Return of Capital Employed / Return of Investment

Forecasting

Predict the next number in the pattern:

a) 3.7, 3.7, 3.7, 3.7, 3.7, ?

b) 2.5, 4.5, 6.5, 8.5, 10.5, ?

c) 5.0, 7.5, 6.0, 4.5, 7.0, 9.5, 8.0, 6.5, ?

• Predict the next number in the pattern:

a) 3.7, 3.7, 3.7, 3.7, = 3.7,

b) 2.5, 4.5, 6.5, 8.5, 10.5, = 12.5

c) 5.0, 7.5, 6.0, 4.5, 7.0, 9.5, 8.0, 6.5, = 9.0

Forecasting trends


• Seasonal Demand• Holidays

• Dassain , Tihar, Christmas, Chinese New Year - Clothes, Sweets

• Black Friday

• UK, US, India – Electronics, Online shopping

• Discounts and Sales ,

New Product launches , Critics Review, Latest Movies

Types of ForecastingQualitative Methods – Logical / Rational

Forecasts generated subjectively by the forecaster Quantitative Methods –

Statistics / Data

Forecasts generated through mathematical modeling

Forecasting during product life cycle

Qualitative Quantitative

Warehousing & Freight Transport


Introduction - Growth – Maturity – Decline - End

What is the Single most valuable commodity today? – Besides Water

Space

Expensive

Location determines everything

Own

Rent

Lease -Land-lord

What is the purpose of Warehousing?To provide Customer service

• Quick Response

Same Day Delivery, Next Day Delivery, 2 Day Delivery

• Safety Stocks

• Consolidated deliveries

• Value added services

Special packing

Postponement

Basic Warehousing Functions

Supply Chain ManagementReceiving

Unload Vehicle

Inspect for Damage

Check for Accuracy

Put Away

Identify Product

Correct Location

Update Records

Inbound

Types of Warehouses• Manufacturing Support

• Consolidation

• Cross Docking

• Break Bulk


Receiving

Unload Vehicle

Inspect for Damage

Check for Accuracy

Put Away

Identify Product

Correct Location

Update Records

Order Picking

Pick the right prod-uct

Batch Picking

Packing

Boxes / Pallets

Labeling

Shipping

Load Vehicle

Bill

Record Update

Customer Order

Manufacturing/Value Adding

Outbound


Cross Docking

Seller-A

Seller-B

Seller-C

Customer

Cus-tomer

Cus-tomer

Seller

Objectives of Effective Design

Handling• Handling must optimize move-

ment continuity and efficiency• Receiving—Unloading the

arriving vehicles• In-Storage—moving goods

for storage (transfer) or order selection (picking)

• Shipping—verifying the or-der and loading the departing vehicles


Design - Receiving and ShippingIn and Out

Ideally

What goes in should not come out the same way – Large Movements / High fre-quency


Receiving

Receiving

Receiving

Shipping

Shipping

ShippingShipping

Receiving

WA

REH

OU

SIN

G

WARE-HOUS-ING

Location ConsiderationCost – Rent, Land Cost

CongestionAvailable Resources – Electricity, Water,Man Power – Skills, Wages

Govt. Projects, Chemical Factory, Laws

Customers

Location

Supplier

CloserAccess

General Area

Access to Sea, Airports, Transport Routes


Other Warehouse Design Factors• Design for Safety• Design for Health• Fire / Humidity Proof• Pests and Insects• Insurance

Warehouse Design – Space utilization


Storage Picking / Packing Goods in / out GoodsOffice, other

Freight Transportation


Cost - Weight

Reliable - Fast

Finance Supply Chain• Interlink between Finance Department and Sourcing/ Supply Chain Depart-ment• Almost 70% of financial Activities related to Sourcing / Supply Chain

• Sourcing Budgeting based on production plan

• Close Supervision on Supply Chain Activities

CHALLENGING ASPECTS• Difficult to convince about Nepal Custom Process• Proforma Invoice Content• Reliable Vendor Selection• Export Invoice Number Booking by Buyers

EXPECTATION FROM SOURCING AND SUPPLY CHAIN MANAGER

• Budgeting for Sourcing based on Order and Production Plan

• Proforma Invoice based on Nepal Compliance

• Material In-house Planning

• Bank Guarantee status and its utilization

• Selling Planning

• Sourcing Planning

• Goods Delivery Planning

• APC RequirementSupply Chain Management

1.2 Objective of the Study

As stated by the topic, I was curious to know how the impact of Global logistic service providers to local logistics service providers in Nepal and Global such a large network supply chain. I was also very eager to know the importance of logistics and its supply for business environment and consumers’ daily life by providing goods and service in right time, at right place, in right quantity, in right quality and in right cost.Through increasingly global supply chains, the logistics industry inevitable touches every facet of our lives, both at home and at work. Today, these supply chains are in the spotlight. They are one of the first places informed consumers look to see what sus-tainable practices are associated with sustainable practices are associated with a given product or service. Consumers now better understand and take into account the environmental impact of the transportation of the goods they buy.That the sector is currently a significant consumer of fossil fuels is self-evident; however, this makes the industry’s emerging vision of a future with minimal environmental impacts even more impor-tant to achieve. As international trade grows, so too does the need for companies to create more focused and resilient supply chains: logistics and transport have moved from the backroom to the boardroom to become a competitive differentiator, critical for business success.The core Objectives were:-

1. Analysis of upstream and downstream of Logistics Company.2. Analysis the gap between customer requirement and quality

supply by producer.

3. To help, understand the nature of organizational problem in real life situation, learn to find solutions of those problems.

4. Overview of the supply chain management of logistic com-pany.

5. Explore the challenges of the logistics company.Supply Chain Management

6. To get knowledge of the networking and relationship of sup-pliers supplier to consumers’ consumer and their satisfaction

INDING, CONCLUSIONS AND RECOMMENDATIONS

3.1 Findings

Firstly, the project should determine the forms of logistics uncertainty that impact

on supply chain performance. After that, intensive research should be carried out in

establish the impact of supply chain strategies and principles on green logistics

performance. The global logistic service providers and local logistic service

providers companies in evolving global market environment first, by supporting

quantifiable and targeted environmental and energy improvements and second, by

maintaining the sector’s economic viability during a time of limited capital financ-

ing and international competition. Logistic objective were aligned with govern-

ment priorities, and with the departmental strategic objective of Environmental Re-

sponsibility. The evaluation also found that there was a clear role for the federal

government in this type of programming considering the wider environmental ben-

efit for Nepalese and the fact that the logistic ran in parallel with similar targeted

funding initiatives to stimulate capacity in other key industrial sectors. The logistic

also clearly resulted in enhanced capacity-building and relationship-building for

both internal and external stakeholders.

The important of green logistic is to improve the environmental performance of

Nepal’s industry, in turn contributing to environmental and hence, commercial,

sustainability. The key to success behind is the only management of SCM of any

industry. We can say that role of SCM is not limited to any industry rather it has

application over almost all industries. It would not be overstatement of the supply Supply Chain Management

chain management if one would say any firm can complete in industry just only the

bases of how it manages its supply chain, work for betterment of it and move it to-

wards higher efficiency every day.

3.1 Conclusion

3 Recommendations

Flexibility is extremely important, especially when dealing with your extended network.

Negotiation with Government of Nepal (GON) for providing some facilities regarding the

inventory holding cost in customs office at the time of striking, clear tax policies while

importing the raw material from other country and so on.

The Logistic should go with systematic research method for forecasting of demand in the

country so that it can reduce inventory holding cost.

The industry should strengthen distribution channel for widely distribution. All distribu-

tion channels should be adopted by the industry. Zero level channel of distribution will

be effective when the ultimate user is construction industry.

Shorten time to market and shrink your planning horizon. The severe time compression

makes for more overlap between the design, production and inventory control phases,

rendering some conventional procedures either unnecessary or counterproductive. Look

for “waste” in the value chain and remove it. Shrinking your planning and execution

horizon is hard but has good results.

Lead time and agility mean more than chasing the needle for the absolute minimum

cost. The lowest-cost supplier is likely to be the slowest as well, because it will rely on

full capacity utilization to compensate for low margins.

Forecast at the style level. Don’t attempt to create a detailed forecast per channel. In-

stead, create a one-number anticipated demand per style and a supply plan with built-in


flexibility to meet both a 300-plus percent uplift and to minimize the commitment risk

on a flop.

Manage inventory as a central pool. Remove all inventory silos and DO NOT allow sep-

arate inventory management by channel.

pre-allocate warehoused material stocks as a standard procedure. Market volatility due

to fickle consumers, the impact of social media, and other factors make it meaningless.

Build strong value chain partnerships with your suppliers and integrate processes so that

you can replenish just in time in a matter of days rather than weeks, thereby minimizing

inventory and work in progress risk in the supply chain.

.


a report about scm & logistics

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