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Supply Chain Management
Topic: LogisticsLecturer: Ibtihaj abbas khan
Date: 19/02/15
Supply Chain Management
Legends of Logistics
Dabbawala’s (Video)
Supply Chain Management
Logistics is
“The process of planning, implementing andcontrolling the efficient, effective flow and storage of goods, services and related information from pointof origin to point of consumption for the purpose of customer Satisfaction”
(council of logistics management)
Supply Chain Management
• Business Logistics– The planning, implementation, & control of the efficient &
effective flow and storage of goods, services, & related information from point of origin to point of use or consumption in order to meet customer requirements
• Military Logistics– The design & integration of all aspects of support for the
operational capability of the military forces (deployed or in garrison) and their equipment to ensure readiness, reliability, & efficiency
Supply Chain Management
• Event Logistics– The network of activities, facilities, and personnel required
to organize, schedule, and deploy the resources for an event to take place and to efficiently withdraw after the event
Supply Chain Management
• Logistics has existed since the beginning of civilization. Raw material and finished products had always to be moved, though on a small scale. Things began changing with the advance in transportation. Population began moving from rural to urban areas and to business centre. No longer did people live near production centre, nor did production take place near residence centre. The geographical distance between the production point and consumption point increased. And logistics gained importance.
Supply Chain Management
THE PURPOSE OF LOGISTICS SYSTEM• Right quantities of the• Right goods to the• Right places at the• Right time in the• Right condition at the• Right cost.
Supply Chain Management
A Simple Logistics ChannelRaw materials supply point
Raw materials supply point
Production facility
MarketCustomers
MarketCustomers
MarketCustomers
Product Flow
Supply Chain ManagementA Multi-Echelon Logistics Channel
Raw materials supply point
Raw materials supply point
Production facility
Retailer
Product Flow
Retailer
Retailer
Retailer
Retailer
Retailer
Warehouse
Warehouse
Raw materials supply point
Supply Chain Management
Two Main Types:
• Inbound logistics: The management of materials from suppliers and vendors into production processes or storage facilities.
• Outbound Logistics: The process related to the movement and storage of products from the end of the production line to the end user.
Supply Chain Management
Steps toward improving Logistics performance
• Make transport a customer service activity instead of a cost• Reduce your stock pipeline to cut costs and improve service
(go easy by low inventory)• Pick as soon as you can (pick once, pick right and cut the cost time
and error)• Is everything you are doing is really necessary
Supply Chain Management
Transportation:• Transport or transportation is the movement of people and
goods from one place to another. Industries which have the business of providing actual transport, transport of people or goods and services referred to as transport industries.
Supply Chain Management
Basic modes of transport• By Air
• By Road – By Train
• By Sea
Supply Chain Management
Considerations in Transportation• Cost / Rates• Reliability• Safety / Damages• Insurance• Speed / Time• Mode of Transportation• Routes / sectors• Vehicles type• Urgency / Priority• In-house / Outsource
Supply Chain Management
Supply Chain Management
3rd Party Logistic Service providers
Supply Chain Management
3rd Party Logistic Service providers“Third-party Logistics is simply the use of an outside
company to perform all or part of the firm’s materials management and product distribution function.”
-- Simchi-Levi (2000)
Supply Chain Management
Characteristics of 3PL• Perform outsourced logistics activities• Process management / Multiple activities• More customized services• Long-term commitments (1~ 3 years)
Supply Chain Management
• Advantages• Cost reduction• Focus on core competency• Improved efficiency, service and flexibility
• Disadvantages• Loss of control• Impact on in-house workforce
Supply Chain Management
Current State -- Market Size
34.239.6
46.054.0
1997 1998 1999 2000
3PL market is growing
( $ Billions )
Supply Chain Management
Current use of 3PL by industry
75.9
71.1
61.4
56.2
53.8
82.2
Percentage of 3PL use in different industries Industry
Computer
Consumer
Retail
Chemical
Medical
AutoSource "What's ahead for 3PLs“ Modern Materials Handling, April, 2000
