Supply chain lecture

SUPPLY CHAIN:

LOGISTIC & DISTRIBUTION IN

CONTEXT

Logistics and Supply Chains

What is Logistics

The total management of the key operational

functions in the

supply chain – procurement, production and

distribution.

Procurement includes purchasing and product

development. The production function includes

manufacturing and assembling,

while the distribution function involves warehousing,

inventory, transport and delivery.

Logistics and Supply Chains

Logistics : Range of Activities Involved

• Freight fowarding

• Customs brokerage

• Freight auditing and payment

• Vehicle control and

communications

• Product identifications &

tracking

• Information systems –

optimisation in management

Logistics and Supply Chains

Logistics : Range of Activities Involved

• Transportation services / Brokerage

• Transportation equipment / leasing

• Private fleet assets / management

• Warehousing

• Order Management & fulfillment

• Cross docking

• Value added, assembly & configuration

• Site location

Logistics and Supply Chains

is the planning, organisation and control of all aspects

of inventory embracing procurement, warehousing, work

in progress and distribution of finished goods.

Materials Management

Logistics and Supply Chains

Logistics and Supply Chains

Logistics : Transport Principles

• Economies of scale : Large capacity transportation

vehicle are less costly per unit of freight than smaller

capacity vehicle.

• Economy of distance : Decrease transportation coast

per unit of weight as distance increase. To maximise the

size of load and the distance being shipped while still

meeting the customer expectation,

Logistics and Supply Chains

Logistics :Transport Mode

• Small Packages

• Air Cargo

• Truckload

• Railroad/ Train

• Water

• Pipe Line

• Intermodal (Combination)

Logistics and Supply Chains

Logistics :Transportation

Management

• On-time pick up

• On-time delivery

• Loss & damage claims

• Transit time

• Transit time reliability

• Equipment availability

• Price

• Continuous improvement

Logistics and Supply Chains

Economic Driver

Factors

Distance

Weight

Density

Stowability Handling

Liability

Market

is the process of planning, implementation and controlling

the efficient, cost effective flow of raw materials, in process

inventory, finished goods and related information from the

point of consumption to the point of origin for the purpose

of recapturing value or proper disposal.

Reverse Logistics

Logistics and Supply Chains

Logistics and Supply Chains

A Supply Chain is that network of organisations that are involved,

through upstream and downstream linkages, in the different processes

and activities that produce value in the form of products and services

in the hands of the ultimate customer or consumer.

Can be classified according to:

• Customer/supplier characteristics

• Virtuality

• Scope

• Service

• Complexity

• Products

• Purpose and value

Types of Supply Chain

Logistics and Supply Chains

Logistics and Supply Chains

Logistics and Supply Chains

Logistics and Supply Chains

Logistics and Supply Chains

Supply Chain Management

– Eight Processes

Customer

relationship

management

Product development

& commercialisation

Supplier relationship

management

Manufacturing flow

management

Order

fulfillment

Demand management

Customer service

management

Returns

management

Logistics and Supply Chains

Cranfield Five Categories of Supply Chain Risk!

Supply Chain Vulnerability

Chaos

Risks

Lack of

Ownership

Decision

Risks J.I.T

Relationship

Risks

Inertia

Risks

Logistics and Supply Chains

Diversification

Stockpiling

Redundancy

Insurance

Supplier selection

Localised sourcing

Rationalisation of the product range

Collaborative initiatives

Contractual obligation

Supplier development

Ten ways of Managing Supply Chain Risk

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Logistics and Supply Chains

• Inbound logistics

• Operations

• Outbound logistics

• Marketing and sales

• Service

Five Primary Activities

Porter’s Value Chain Model

Logistics and Supply Chains

Porter’s Value Chain Model

Four Support Activities • Firm infrastructure

• Human resources

• Technology development

• Procurement

Logistics and Supply Chains

Economic or diseconomies of scale

Learning and spillovers

Capacity utilisation

Linkages among activities

Inter-relationships

Institutional factors

Geographic location

Firms policy of cost or differentiation

Timing of market entry

Degree of vertical integration

Ten Major Cost Drivers – Value Chains

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Logistics and Supply Chains

Main Steps in

Strategic Cost Analysis

Identify value chain &

assign costs & assets to it

Diagnose the cost

drivers of each activity

Identify competitor

value chains

Develop a strategy lower

relative cost position

Ensure cost reduction

efforts do not differentiate

Test the cost reduction

strategy for sustainability

Logistics and Supply Chains

Supply Chains – Who Runs Them?

Logistics or supply manager

Operations or production director

Logistics or supply director

Operations or production manager

Sale, finance or commercial

45%

20%

15%

14%