chapter 1management of business logistics, 7 th ed.1 bus 3620 logistics and scm we start our lecture...

Chapter 1Management of Business Logistics,

7th Ed. 1

BUS 3620 Logistics and SCM

We start our lecture to firstly gain the understanding of the following two fundamental questions:

What is Supply Chain Management (SCM)?

What is Logistics?

Chapter 1:

Supply Chain Management


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Supply Chain Management: Introduction

Why do we need to know SCM?


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Supply Chain Management: Introduction

4 Reasons: 1. Supply chain management now part of

the business vocabulary.2. Impact of global marketplace drastically

changed the landscape of business.3. Change was rapid and continuous in the

1990s.4. Doing business in the comfort zone was

no longer synonymous with success.


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The Changing Business Landscape: Five Driving Forces

1. The Empowered Consumer2. Power Shift in the Supply

Chain3. Deregulation4. Globalization5. Technology


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1. The Empowered Consumer Impact on logistics is more direct. Informed consumers have low tolerance

for poor quality in products and services. Changing demographics commands 24/7

service, become less royal Increased customer service increases

the importance of logistics and supply chains.


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2. Power Shift in the Supply Chain Large retailers more demanding and

commanding. Focus upon distribution costs and

their impact on “everyday low prices”.

Changing logistics and supply chain strategies resulted from shifts in the balance of economic power.


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3. Deregulation (4 main legs) Changing economic controls empowered

creativity and competition.1. Changes in transportation – fewer or no

economic controls over rates and services.2. Change in financial institutions blurred

traditional differences and increased competition.

3. Change in the communications industry also resulted in more competition.

4. Changes in the utility (energy) industry allows more competition.


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4. Globalization Global marketplace concept Global network sourcing, manufacturing,

marketing and distribution Global alternatives have blossomed No geography --- access available to the world Supply chain challenges Wal-Mart’s challenges New supply sources


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5. Technology Information Age provides new and

unrestricted access to the place aspect of business.

My time, my place Warehouse technology has changed

dramatically with computer devices in use from the office space to the forklifts.


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Success of story of SCM

How SCM helps to enhance the expansion of a business ventures?


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On the Line: Extreme Enterprise

Integrating new enterprise and supply chain management solutions allowed Columbia Sportswear to keep up with sales that increased from $3 million in 1984 to $470 million in 1999.

With one store and a handful of outlets, distribution to its customers is where the rubber meets the road.

Columbia’s president was determined not to let distribution restrain growth, and backed it with money.

A 1 million square foot distribution center receives more than 2 million units/month and set a record by shipping 172,000 items in one day, and more than 2 million items in a month.


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The Changing Business Landscape: The Supply Chain Concept

1. Definition2. Development of the Concept3. Business Case for Supply Chain

Management4. Characteristics of Supply Chain

Management


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1. The Supply Chain Concept: Definition

An extended enterprise that crosses over the boundaries of individual firms to span the logistical related activities of all the companies involved in the supply chain.


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2. Development of the Concept

Five main elements:1. Total systems cost - remains an important

element of logistics analysis.2. Outbound logistics - was the initial focus

with higher value finished goods.3. Inbound logistics – deregulation allowed

new focus on coordination of inbound and outbound movements.

4. Value chain analysis integrated logistics activities.

5. Terminology growing as supply chain concept matures.


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2. Development of the Concept

A general view:

Inbound

OutboundSuppliers

1960s – physical distribution , emphasized on outbound – Figure 1.11980s – inbound logistics added, thus need coordination between both inbound and outbound systems – value chain needed – Figures 1-2-1.4


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Figure 1-1 A View of Business Logistics in a Firm


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Figure 1-2 Integrated Logistics Management

Identifying activities, Figure 1-3

Figure 1-4


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Figure 1-3Generic Value Chain


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Figure 1-4 Logistics Supply Chain


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3. Business Case for Supply Chain Management: Why so much attention on supply chain

management? ECR and Best-in-class studies (Figures 1.5, 1.6 )

(ECR - Effective customer response) Complexity of the supply chain (Figure 1.7) Extended enterprise concept Two-way flow of: (Figure 1.7)

Products Information Cash

Inventory visibility (Figure 1.8)


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Figure 1-5: Comparison of Average Throughput Time of Dry Grocery Chain before and after ECR Implementation


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Figure 1-6: Total Supply Chain Management Cost --- All Sectors

0

2

4

6

8

10

12

14

1996 1997

Best-in-classMedian

Reven

ue %


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Figure 1-7: Integrated Supply Chain


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Figure 1-8: Running Lean

05

101520253035404550

1996 Qtr 4

1997 Qtr 1

1997 Qtr 2

1997 Qtr 3

1997 Qtr 4

CompaqDell

Number of times Dell and Compaq turn inventory over in each quarter, calculated at an annual rate.


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4. Five Main Characteristics of Supply Chain Management

1. Inventory Visibility – managing flow and reduce or eliminate

uncertainty

Pull systems – response to demand as opposed to pushing it to advance of demand

2. Landed Cost1. Companies must realize that their

strategies may affect the landed cost – ie the final cost

2. Coordination of supply chain activities may lower the landed cost.


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4. Five Main Characteristics of Supply Chain Management

3. Real-time two way information flows4. Customer service

levels must be tailored to each customer – not to treat all customers the same

not all customers require the same service – need to cater the special need of individual customers

5. Supply chain relationships1. Collaborative planning2. Share risks and rewards


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Figure 1-9: Traditional Supply Chain/Pipeline Inventory Flow 1970s and 1980s


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Contemporary Supply Chain Pipeline

Chapter 1: Summary and Review Questions

Students should review their knowledge of the chapter by checking out the Summary and

Study Questions for Chapter 1.

This is the last slide for Chapter 1

End of Chapter 1 Slides

Supply Chain Management

chapter 1management of business logistics, 7 th ed.1 bus 3620 logistics and scm we start our lecture...

Documents

landscape of business

supply chain management

changing business landscape

business vocabulary

chain management scm

importance of logistics

supply chain strategies

place aspect of business