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Lecture 2 Introduction to Logistics
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Lecture 2 Introduction to Logistics

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  • 1. Introducing Logistics & Supply Chain Management Compiled by Rulzion Rattray
  • 2. Logistics (Christopher, M. 1998)
    • Logistics is the process of strategically managing the procurement, movement and storage of materials, parts and finishing inventory (and the related flows of information) through the organisation and its marketing channel in such a way that current & future profitability are maximised through the cost-effective fulfilment of orders.
  • 3. The Resource Environment The Value Chain Michael Porter (1985) Margin Margin Firm’s Infrastructure Human Resource Management Technology Development Procurement Inbound Logistics Operations Marketing & Sales Outbound Logistics Service Primary Activities Secondary Activities
  • 4. Resource Environment The Value Chain Michael Porter (1985) Firm’s Value chain Supplier value chains Channel value chains Customer value chains
  • 5. Supply Chain Management
    • The management of upstream and downstream relationships with suppliers & customers to deliver superior customer value at less cost to the supply chain as a whole. (Christopher, M. 1998)
    • A network of connected & interdependent organisations mutually & cooperatively working together to control, manage and improve the flow of materials and information from suppliers to end users. (Aitken, J., 1998)
  • 6. Mission of Logistics Management
    • Scope of logistics spans the organisation
    Suppliers Operations Distribution Customers Procurement Material Flow Requirements Flow
    • Means by which customers are satisfied through coordination of material & information flow
  • 7. Supply Chain and Performance
    • Supply chain is the network of organisations that are involved through upstream or downstream linkages.
    • Traditionally most organisations see themselves as separate entities
    • Traditionally Logistics management has been concerned with flow within the organisation.
  • 8. Achieving an Integrated Supply Chain Purchasing Material Control Production Sales Distribution Material management Manufacturing management Distribution Material management Manufacturing management Distribution Suppliers Internal Supply chain Customers Material Flow Customer Service Material Flow Customer Service Material Flow Customer Service Material Flow Customer Service Stage 1 Stage 2 Stage 3 Stage 4
  • 9. Increasing Complexity
    • At the end of the second world war there was a global shortage of manufactured goods.
    • Today At the beginning of the third millennium there is an oversupply.
    • Firms shop freely amongst the nations
    • In 1991, for the first time, companies spent more money on computing and communications gear than the combined moneys spent on industrial, mining, farm, and construction equipment.
  • 10. Organisational Integration
    • Increasing requirement of integration will require generalists who can manage processes.
    • Knowledge of systems theory and systems thinking will be a requirement for these generalist mangers.
    • We are entering an era of supply chain competition
  • 11. Rules of Competition
    • Competitive advantage achieved by a combination of product excellence and process excellence.
    • Responsiveness and agility
    • Reliability in logistics this will require enhanced pipeline visibility
    • Relationships trend towards customers seeking to reduce supplier base?
  • 12. References
    • Aitken, J., “ Supply Chain Integration within the Context of a Supplier Association” , Cranfield University PHD Thesis, 1998. Cited in Christopher, M., (1998), “Logistics and Supply Chain Management. Strategies for Reducing Cost and Improving Service”, Financial Times Pitman Publishing, London .
    • Christopher, M., (1998), “Logistics and Supply Chain Management. Strategies for Reducing Cost and Improving Service”, Financial Times Pitman Publishing, London
    • Porter ME 1979, “How Competitive Forces Shape Strategy”, Harvard. Business Review March/April 1979.
    • Porter ME 1985 , Creating & Sustaining Superior Performance, Free Press.