From Logistics Management to Supply Chain Management

Speaker: Chen Yuh-Wen

Content

• Basic Concepts of Logistics Management

• Basic Concepts of Supply Chain Management

• From Logistics Management to Supply Chain Management: A Simple Software

• Future Works

Basic Concepts of Logistics Management

• Definition• Logistics Strategy and Planning• Logistics Network• Relative Importance of Service Elements• Customer Order Processing• Transportation System• Storage and Handling System• Inventory Policy

Logistics Strategy

• Objectives of logistics strategy– Cost reduction– Capital reduction– Service improvement

Major Planning Areas of Logistics Management

• Customer service goals

• Facility location strategy

• Inventory decisions

• Transport strategy

Logistics Network

The Logistics Network consists of:

• Facilities:Vendors, Manufacturing Centers, Warehouse/ Distribution Centers, and Customers

• Raw materials and finished products that flow between the facilities.

Supply

Sources:plantsvendorsports

RegionalWarehouses:stocking points

Field Warehouses:stockingpoints

Customers,demandcenterssinks

Production/purchase costs

Inventory &warehousing costs

Transportation costs Inventory &

warehousing costs

Transportation costs

• ©Copyright 1999 D. Simchi-Levi, P. Kaminsky & E. Simchi-Levi

The objective of Logistics Management is to balance service level against

• Production/ purchasing costs

• Inventory costs

• Facility costs (storage, handling and fixed costs)

• Transportation costs

• Lost Sales Cost

Relative Importance of Service Elements

Customer Order Processing

Transportation System

Storage and Handling System

Inventory Policy

Basic Concepts of Supply Chain Management

• Definition

• The Dynamics of the Supply Chain: The Bullwhip Effect

• Strategic Partnering

• Postponement

• IT and Decision Support System .

Definition of SCM

• Definition:Supply Chain Management is 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.

• Notice:– Every partner is involved– Systems approach to reducing costs– Integration is the key

SupplierPartner 1

SupplierPartner 2

Enterprise

Mfg.Partner 3

Mfg.Partner 2

LogisticsSupplier 1

Mfg.Partner 1

LogisticsSupplier 2

Customer 3

Customer 2

Customer 1

The Dynamics of the Supply Chain : The Bullwhip Effect

Ord

er

Siz

e

Time

Source: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998

CustomerDemand

CustomerDemand

Retailer OrdersRetailer OrdersDistributor OrdersDistributor Orders

Production PlanProduction Plan

Strategic Partnering• Advanced Information Systems

• Top Management Commitment

• Mutual Trust

PostponementBenetton …Old Manufacturing Process

Spin or Purchase Yarn

Dye Yarn

Finish Yarn

Manufacture Garment Parts

Join Parts

PostponementBenetton…New Manufacturing Process

Spin or Purchase Yarn

Manufacture Garment Parts

Join Parts

Dye Garment

Finish Garment

This step is postponed

IT and Decision Support System

From Logistics Management to Supply Chain Management

• Integration– Information Technology

– Database Sharing

– Work Language (Code)

– Global Optimization

• A Simple Model D:\.企業供應鏈管理決策模型之研究 ppt

Future Work

Suggested Future Researches

• Alliances and SCM

• Allocation Problem and SCM

• Intelligent SCM