Transcript Logistics and Supply Chain Management

Logistics and Supply Chain
Management
Logistics
 The Oxford English Dictionary defines logistics as
"the branch of military science having to do with
procuring, maintaining and transporting materiel,
personnel and facilities."
 Logistics Management defines as “Application of
management principles to logistics operations for
efficient and cost effective movement of goods and
personnel.”
 Involves entire supply chain
 Increasing importance of logistics
– effective logistics is becoming a key to winning and
keeping customers.
– logistics is a major cost element for most companies.
– the explosion in product variety has created a need for
improved logistics management.
– information technology has created opportunities for
major gains in distribution efficiency.
Goals of Logistics system
• Provide a Targeted Level of Customer Service at
the Least Cost.
• Maximize Profits, Not Sales.
Higher Distribution Costs/
Higher Customer Service
Levels
Lower Distribution Costs/
Lower Customer Service
Levels
Logistics Functions
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Order Processing
Warehousing
Inventory Management
Transportation
 Design system to minimize costs of
attaining objectives
Transportation Modes
Rail
Nation’s largest carrier, cost-effective
for shipping bulk products, piggyback
Truck
Flexible in routing & time schedules, efficient
for short-hauls of high value goods
Water
Low cost for shipping bulky, low-value
goods, slowest form
Pipeline
Ship petroleum, natural gas, and chemicals
from sources to markets
Air
High cost, ideal when speed is needed or to
ship high-value, low-bulk items
Supply Chain Management
 According to the Council of Supply Chain
Management Professionals (CSCMP), Supply chain
management encompasses the planning and
management of all activities involved in sourcing,
procurement, conversion, and logistics management.
it also includes the crucial components of coordination
and collaboration with channel partners, which can be
suppliers, intermediaries, third-party service providers,
and customers.
WHAT IS SUPPLY CHAIN MANAGEMENT
" Is the strategic management of activities involved in
the acquisition and conversion of materials to finished
products delivered to the customer"
Supplier
Management
Schedule /
Resources
Material Flow
Information Flow
Conversion
Customer
Management
Stock
Deployment
Leads to Business Process Integration
Delivery
 SUPPLY CHAIN INCLUDES :
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MATERIAL FLOWS
–
INFORMATION FLOWS
–
FINANCIAL FLOWS
 A set of approaches used to efficiently integrate
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Suppliers
Manufacturers
Warehouses
Distribution centers
 So that the product is produced and distributed
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In the right quantities
To the right locations
And at the right time
 System-wide costs are minimized and
 Service level requirements are satisfied
Supply Chain Structure
SUPPLIER
Raw Materials
FACTORY
DC
RDC
RETAILER
Finished Goods
Information Flow
Relationship between Facilities and Functions along the
Wal-Mart Supply Chain
The steps involved
 Step1- Designing the supply chain
– Determine the supply chain network
– Identify the levels of service required
 Step 2 - Optimizing the supply chain
 Determine pathways from suppliers to the end
customer
– Customer markets to Distribution centers
– Distribution centers to production plants
– Raw material sources to production plants
– Identify constraints at vendors, plants and
distribution centers
– Get the big picture
– Plan the procurement, production and
distribution of product groups rather than
individual products in large time periodsquarters or years
Step 3- Material flow planning
• Determine the exact flow and timing of materials
• Arrive at decisions by working back from the
projected demand through the supply chain to
the raw material resources
• Techniques
 ERP
Step 4 - Transaction processing and
short term scheduling
• Customer orders arrive at random
• This is a day to day accounting system which
tracks and schedules every order to meet
customer demand
• Order entry, order fulfillment and physical
replenishment
Global Supply Chain
 To compete globally requires an effective
supply chain
 Information technology is an “enabler” of
global trade
 Nations form trading groups
 No tariffs or duties