difference between scm n logistics

8/3/2019 Difference Between SCM n Logistics

1/22

WHY SUPPLY CHAIN MANAGEMENT-1

Traditionally marketing , distribution planning,manufacturing and the purchasing organizationsalong the supply chain operated independently.

These organizations have their own objectives

which are often conflicting.

Marketings objective of high customer serviceand maximum sales revenue conflicts with the

manufacturing and distribution goals.Many manufacturing operations are designed tomaximize production and lower costs with littleconsideration for the impact on inventory levelsand distribution capabilities


2/22

Customer


3/22

What is SCM?

Supply chain management (SCM) systems coordinate the movement of productsand services from suppliers to customers (including manufacturers, wholesalers,

and retailers).

These systems are used to manage demand, warehouses, trade logistics,

transportation, and facilities, as well as the movement and transformation of

materials on their way to customers.

SCM applications link people and organizations (and their activities) to information

and resources. The ultimate goal is for all components of the chain to exchange

information with maximum efficiency and effectiveness, in order to obtain best

results for all parties.


4/22

SCM applications link people and organizations (and their activities) to

information and resources. The ultimate goal is for all components of the

chain to exchange information with maximum efficiency and effectiveness,

in order to obtain best results for all parties.

A comprehensive SCM solution allows you to focus on and optimize key

components of your supply chain operations:

demand management

order management

warehouse management

production and supply planning

service parts planning

supplier relationship management

supply chain event management

international trade logistics transportation management

The difference between managing these components effectively and mismanaging

them can mean the difference between success and disaster.


5/22

Supply Chain Management

Supply Chain Strategy

Supply Chain Planning

Supply Chain Execution


6/22

Objectives of Supply Chain Management are to optimize pre and post-

production inventory levels, obtain greater efficiency from labour,equipment and space across the company and provide flexible planning

and control mechanisms.

Supply Chain management strives for a single chain of supply having the

following objectives:

Controlled customer service performance

Reduction of pre and post-production inventory

Minimum variance (Standardization)

Minimum total cost of operations and procurement

Product quantity controlMaximum efficiency in using labour, capital and plant through out the

company

Flexible planning and control procedures

OBJECTIVES OF SUPPLY CHAIN MANAGEMENT


7/22


8/22

Components of Logistics

Suppliers

Raw materialsSub assemblies

Manufactured parts

Packing materials

Inbound

Materials

flow

WorkIn

Progress

FinishedGoods

& parts

Outbound

Finished Goods

InventoryIn the field

Customers*OEMS

*End Users

* Govt.

Logistics

Productions

Transit depot Intermediary

Physical Distribution

Customer ServiceManufacturing & Supply Service

Materials Management


9/22

ELEMENTS OF LOGISTICS

LOGISTICS

Managerial activities Regular activities

Transportation

Ware housing

Order

Processing

Packingand

Shipping

CustomerService

DemandForecasting

WasteManagement

Inventory

Planning &Control


10/22


11/22

DIFFERENCE BETWEEN LOGISTICS & S C M

Logistics management activity is supply driven ( cost minimization

with respect to known or specific demand target & efficiencyfocused). Its can be viewed as a logical extension of transportation

& related area to achieve an efficient and effective goods

distribution system.

Supply chain management is more demand driven ( profitmaximization with some resource constraints at a broad level andeffectiveness focused)

S C M tries to capture the dynamic nature of the value creation itself (

by looking at several competitive elements such as responsiveness ,

quality and design and therefore aims for an effective managementresponse over a longer run. In this context profit maximization over the

long run ( with flexibility of investment and restructuring if required)

emerges the major goal of S C M rather than cost minimization , whichis really on one of the factors contributing to profit maximization.


12/22

Logistics management activity is supply driven ( cost minimization with respect toknown or specific demand target & efficiency focused). Its can be viewed as a logical

extension of transportation & related area to achieve an efficient and effective goods

distribution system.

Logistics deals with the efficient management of the static gap between demand and

supply in localized sense.

Logistics consists of seven Rs Right product , Right qty , Right condition , Right place ,

Right time , Right Customer , Right price - this common definition covers functions

performed by logistics ( Time & place utilities , product movement and storage and

price & customer services are all specified)

LOGISTICS MANGEMENT ACTIVITY


13/22

SUPPLY CHAIN MANAGEMENT

ACTIVITIES

SCM is the combination of art & science that goes

Into Improving the way a company finds the

raw materials And components it needs to make

a product or service,Manufactures that productor create service & delivers It to company

and customers

Activities involved in the supply chain :

PLAN , SOURCE , MAKE , DELIVER ,

STORE & RETURN


14/22

Asupply chain is a network of facilities and distribution options that performs thefunction of procurement of materials, transformation of these materials into

intermediate and finished products, and the distribution of these finished products to

the customers. Supply chain exists in both services and manufacturing organization,

although the complexity of the chain may vary greatly from industry to industry and firm

to firm - Hau LLee and Corey Billington

Supply chain consists of all parties involved , directly or indirectly , in fulfilling a

customer request. The supply chain not only includes the manufacturer and supplier, but

also transporter , warehouse , retailers and customer themselves. Within each

organization, such as a manufacturer, the supply chain includes all functions involved in

receiving and filling a customer request.

What is Supply Chain Management?-1


15/22

Supply Chain Management concept eliminates this inter-

functional protectionism drive, by accepting the whole

supply chain as a single entity . All functions along the

chain share the common objective of supply and are

involved in strategic decision-making. The emphasis is

on integration rather than on interfaces between thedifferent functions. The Supply Chain becomes

responsible for total inventories in the supply pipe line

and also for satisfying customer needs and expectations

while meeting all agreed customer service parametersand company targets.


16/22

Production

Operations

Finance/

Accounting

Engineering

Human

Resource

MgtMarketing

Inbound

Logistics

Conversion

Operations

Outbound

Logistics

Suppliers Customers

Primary Logistics Activities

Transportation Facility Inventory Matls Hldg Comm & Inform.

Primary Service Response Logistics Activities

Waiting time Capacity Delivery

INTEGRATED LOGISTICS SYSTEM

The Integrated Logistics Process


17/22

Supply Chain may be defined as the network consisting of Customer, Retailer,

Distributor, Manufacturer and Supplier, closely linked through efficient flows of,

y Material, involving physical product flow from Supplier to the

End-customer including reverse flow of returns for servicing and repairs.

y Information, involving Customer order receipts in the Supply Chain to delivery from

the warehouse till goods reach the End-customer.

y Finance, involving credit terms, payment schedules, change of title and ownership

arrangements, penalties, etc. at every stage in the Supply Chain.

DEFINITION : SUPPLY CHAIN MANAGEMENT


18/22

In a company the Supply Chain links the

Customer orders/ expected orders (Sales

forecast) with finished product Availability,

from Production Availability and from

SupplierAvailability. The link is so fine tunedthat any change in the status in any of the

stages gets reported throughout the link

immediately, enabling corrective actions andadjustments at every stage, without anyloss of time.

SUPPLY CHAIN CHARACTERISTICS - 1


19/22

The Supply Chain organization has an active role in improving the bottom

line of the company by taking advantage of its systematic influence upon

the 3 cost categories,

y Material costs

Raw material

Semi-finished goods (WIP, working in progress)

Finished goods

Indirect material

y Working capital costs

Interest on all material and goods

Depreciation / value adjustments

y Overheads

IT expenses

Supply Chain organizations try to set free capital tied up in inventories

in the whole pipeline from Supplier to Customer without sacrificing thedesired levels of customer service

SUPPLY CHAIN CHARACTERISTICS - 2


20/22

THE SUPPLY CHAIN MANAGEMENT CONCEPT

The processof planning, organizing and controlling

theflowofmaterials and servicesfromsuppliertoend users / customers.This integrated approachincorporates Suppliers, Supplymanagement,Integrated Logistics and Operations.

When youmanage a supply chain,you co -ordinate,

Supplymanagement, Operations &Integrated logisticsinto a seamless pipelinetomaintain a continualflowofproduct &services.

Marketing linksthe customer, the departmentalfunctionand supply chain management itself.

Marketing analyzes changing trends, potentialmarketvolumes, competitors priceetc.

Marketing then routes information totheotherdepartmentsothey can determinehow &when tomeet

the customer demand. 1


21/22


Marketing along withsupplymanagement ,operations and integrated logisticsworkto :

1. Coordinatetheoutsourcing ofmaterials.

2. Manage bottle necks and reducethe impactoncustomer.

3. Coordinate thesmooth and continual flowofproduct and services into, through, and outofthefirm.

S C M beginswith intensive cost negotiation toobtainlong term agreementwithTier 1 and 2suppliers, S C M

will classifysuppliers as approved, preferred oralliance.

S C M mayuse competitive quotes and price analysisasthe best method to conduct business.

Conceptsmay be 1.Target Pricing or CostDesign 2


22/22


Tacticsto implement S C M Includes :

Developing strong relationship withsupply chainmanagementmembers.

Developing high quality products and services.

Sharing information among supply chain management

members.Reducing theorder cycletime.

Minimizing inventorylevels acrossthesupply chain.

Reducing the numbersofsuppliers and carriers.

Building commitmentto supply chain management

Model implies a need tounderstand total costofownership, Youminimize fragmentation and suboptimization of product/ servicesflow. 3

difference between scm n logistics

Documents