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 ChainsLogistics : 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 ChainsLogistics : 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 ChainsMaterials Management is the planning, organisation and control of all aspects of inventory embracing procurement, warehousing, work in progress and distribution of finished goods.
Logistics and Supply ChainsLogistics : Transport Principles• Economies of scale : Large capacity transportationvehicle are less costly per unit of freight than smallercapacity vehicle.• Economy of distance : Decrease transportation coastper unit of weight as distance increase. To maximise thesize of load and the distance being shipped while stillmeeting the customer expectation,
Logistics and Supply ChainsLogistics :Transport Mode• Small Packages• Air Cargo• Truckload• Railroad/ Train• Water• Pipe Line• Intermodal (Combination)
Logistics and Supply ChainsLogistics :TransportationManagement• On-time pick up• On-time delivery• Loss & damage claims• Transit time• Transit time reliability• Equipment availability• Price• Continuous improvement
Logistics and Supply ChainsEconomic Driver Distance Market Weight FactorsLiability Density Handling Stowability
Logistics and Supply ChainsReverse Logistics 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.
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. Types of Supply Chain Can be classified according to: • Customer/supplier characteristics • Virtuality • Scope • Service • Complexity • Products • Purpose and value
Logistics and Supply Chains Customer relationship management Returns Customer service management managementProduct development Supply Chain Management Demand management& commercialisation – Eight Processes Supplier relationship Order management fulfillment Manufacturing flow management
Logistics and Supply Chains Supply Chain Vulnerability Cranfield Five Categories of Supply Chain Risk! Lack of Decision Inertia J.I.TOwnership Chaos Risks Risks Relationship Risks Risks
Logistics and Supply Chains Ten ways of Managing Supply Chain Risk1 Diversification 2 Stockpiling 3 Redundancy 4 Insurance 5 Supplier selection 6 Supplier development 7 Contractual obligation 8 Collaborative initiatives 9 Rationalisation of the product range 10 Localised sourcing
Logistics and Supply ChainsPorter’s Value Chain ModelFive Primary Activities• Inbound logistics• Operations• Outbound logistics• Marketing and sales• Service
Logistics and Supply ChainsPorter’s Value Chain ModelFour Support Activities • Firm infrastructure • Human resources • Technology development • Procurement
Logistics and Supply Chains Ten Major Cost Drivers – Value Chains1 Economic or diseconomies of scale 2 Learning and spillovers 3 Capacity utilisation 4 Linkages among activities 5 Inter-relationships 6 Degree of vertical integration 7 Timing of market entry 8 Firms policy of cost or differentiation 9 Geographic location 10 Institutional factors
Logistics and Supply Chains Test the cost reduction strategy for sustainability Main Steps in Ensure cost reductionStrategic Cost Analysis efforts do not differentiate Develop a strategy lower relative cost position Identify competitor value chains Diagnose the cost drivers of each activity Identify value chain & assign costs & assets to it
Logistics and Supply ChainsSupply Chains – Who Runs Them?45% Logistics or supply manager20% Operations or production director15% Logistics or supply director14% Operations or production manager Sale, finance or commercial