Logistics and Supply Chain

3. SCM Model

4. Complexity of Global Supply Chain

5. Logistics
• The word, ‘Logistics’ is derived from French word ‘Loger’, which
means art of war pertaining to movement and supply of armies.
• 1. A military concept
• 2. Fighting a war requires:
• (i) Setting an objective
• (ii) Meticulous planning to achieve the objective
• (iii) Proper deployment of troops
• (iv) Supply lines consisting of weaponry, food, etc
• Logistics management includes the design and administration of
systems to control the flow of material, work-in-process, and finished
inventory to support business unit strategy.

6. Concepts of Logistics
• Inbound logistics + Material Management + Physical Distribution = Logistics
• Inbound logistics means the movement of materials received from suppliers.
• Material management means the movement of material and components inside
a firm.
• Physical distribution refers to movement of goods outward from the end of the
assembly line to the customer.
• Supply-chain management is larger than logistics and it links logistics more
directly within the user’s total communication network and with the firm
engineering staff. It not only includes manufacturer and suppliers but also
transporters, warehouses, retailers and customers themselves.
• According to Council of Logistics Management: “Logistics is the process of
planning, implementing and controlling the efficient, effective flow and storage of
goods, services and related information from the point of origin to the point of
consumption for the purpose of conforming the customer requirement”

7. SCM Model

8. SCM
Definition: Supply Chain Management is primarily concerned with the
efficient integration of suppliers, factories, warehouses and stores so
that merchandise is produced and distributed in the right quantities, to
the right locations and at the right time, and so as to minimize total
system cost subject to satisfying service requirements requirements.
• Who is involved –
• Cost and Service Level –
• It is all about integration

9. Conflicting Objectives in the SCM
• Purchasing
• Stable volume requirements
• Flexible delivery time
• Little variation in mix
• Large quantities
• Manufacturing
• Long run production
• High quality
• High productivity
• Low production cost

10. Conflicting Objectives in the SCM
• Warehousing
• Low inventory
• Reduced transportation costs
• Quick replenishment capability
• Customers
• Shortorder leadtime
• High in stock
• Enormous variety of products
• Low prices

13. Supply Chain Challenges
• Global supply chain with long lead times
• Rising and shifting customer expectations
• Increase in labor costs in developing countries Increase in labor costs in
developing countries
• Increase in logistics costs
• Importance of sustainability
• Unprecedented Volatility
• Achieving Global Optimization Optimization
• Conflicting Objectives
• Complex network of facilities
• System Variations over time

14. SCM - Optimization

15. Supply Chain Challenges
• Managing Uncertainty
• Matching Supply and Demand
• Demand is not the only source of uncertainty

16. SCM - Developments

18. What’s new in Logistics
• Global competition
• Shorter product life cycle
• New, low-cost distribution channels
• More powerful well-informed customers
• Internet and E-Business strategies

19. New Concepts
• Push-Pull strategies
• Direct-to-Consumer
• Strategic alliances
• Manufacturing postponement
• Dynamic Pricing
• E-Procurement

20. Evolution
• Logistics Management is that part of Supply Chain Management that plans,
implements, and controls the efficient, effective forward and reverse flow
and storage of goods, services and related information between the point
of origin and the point of consumption in order to meet custo
• “Supply Chain Management encompasses the planning and management
of all activities involved in sourcing and procurement, conversion, and all
logistics management activities. Importantly, it also includes coordination
and collaboration with channel partners, which can be suppliers,
intermediaries, third-party service providers, and customers. In essence,
Supply Chain Management integrates supply and demand management
within and across companies.” mers' requirements.

21. Strategy of SCM
• The strategic level deals with decisions that have a long-lasting effect
on the firm. This includes decisions regarding the number, location
and capacities of warehouses and manufacturing plants, or the flow
of material through the logistics network. • The tactical level typically
includes decisions that are updated anywhere between once every
week, month or once every quarter. This includes purchasing and
production decisions, inventory policies and transportation strategies
including the frequency with which customers are visited. • The
operational level refers to day-to-day decisions such as scheduling,
routing and loading trucks.

22. Process Views of SCM
• PROCESS VIEWS OF A SUPPLY CHAIN
• A supply chain is a sequence of processes and flows that take place within and between different stages and combine to fill a
customer need for a product. There are two ways to view the processes performed in a supply chain.
• 1. Cycle View: The processes in a supply chain are divided into a series of cycles, each performed at the interface between two
successive stages of a supply chain.
• 2. Push/Pull View: The processes in a supply chain are divided into two categories depending on whether they are executed in
response to a customer order or in anticipation of customer orders. Pull processes are initiated by a customer order, whereas
push processes are initiated and performed in anticipation of customer orders.
• Cycle View of Supply Chain Processes
• Customer order cycle
• Replenishment cycle
• Manufacturing cycle
• Procurement cycle