LOGISTICS AND SUPPLY CHAIN

WHAT IS SUPPLY CHAIN?

Supply chain is the network of facilities (warehouse, factories, terminals, ports, stores and homes), vehicles (trucks, trains, planes, ocean vessels, and logistic information system (LIS) connected by an enterprises supplier’s suppliers and its customers’ customers).

Supply

Sources:plantsvendorsports

RegionalWarehouses:stocking points

Field Warehouses:stockingpoints

Customers,demandcenterssinks

Production/purchase costs

Inventory &warehousing costs

Transportation costs

Inventory &warehousing costs

Transportation costs

WHAT IS SUPPLY CHAIN?

Supply Chain Management (SCM) is now an expanded responsibility for business enterprises to attain value optimisation.

Integrates Procurement, Production, Distribution and includes all functions in fulfilling a customer request. These include but not limited to new product development, marketing, operations, distribution, finance and customer service.

Flows in a supply chain

Customer

Information

Product

Funds

LOGISTICS vis a vis SUPPLY CHAIN

Logistics include physical distribution,warehousing,freight transportation.

Logistics is defined by the Council of Logistics management as “that part of the supply chain that plans, implements and controls the efficient, effective flow and storage of goods, services and related information from the point of origin to the point of consumption in order to meet customers’ requirements”.

Why is supply chain management so important?

• To gain efficiencies from procurement, distribution and logistics

• To make outsourcing more efficient• To reduce transportation costs of

inventories• To meet competitive pressures from

shorter development times, more new products, and demand for more customization

ELEMENTS OF SUPPLY CHAIN

Simple supply chain is made up of several elements

A. Customers

B. Planning

C. Purchasing

D. Inventory

E. Production

F. Transportation

linked by movement of products.

It operates at three levels: Strategic,Tactical,Operational

ELEMENTS OF SUPPLY CHAIN

Strategic -> Product Development, Customers, Manufacturing, Suppliers,Logistics

Tactical -> Cost benefit measures vizIndustry Best practices, Purchase Strategy,Warehouse Strategy, Inventory Control,Cost effective Transportation

Operational-> Make schedule changes to production,Purchasing agreements with Suppliers,Taking orders from cutomers,Moving Products

KEY DRIVERS OF SUPPLY CHAIN

The Key drivers for best in class supply chain are

Inventory

Transportation

Information

Facilities

Need to be considred in the Design,Plam and Operation stage

KEY DRIVERS OF SUPPLY CHAIN

Design Phase

- Structuring the Supply Chain, Chain configuration and the processes at each stage

- Decisions on location, capacities, warehousing facility, products, mode of distribution (Multimodal), type of info systems

- Long Term and expensive to alter on short notice

- To take into account uncertainties in market conditions

KEY DRIVERS OF SUPPLY CHAIN

Planning Phase To define set of operating policies that govern short

term operations Establish constraint within which planning must

be done. Forecast of sale / market to supply point

linkage / planned buildup of inventories Make or buy decisions, business continuity, size of marketing promotion. Consider uncertainty of demand, exchange rate,

taxation issues Use the flexibility in the design to optimize the

performance in short term

KEY DRIVERS OF SUPPLY CHAIN

Operation Phase

Time horizon – weekly / daily-

Implement operating policies in the best possible manner

Scheduling process

Exploit reduction of uncertainty and optimize performance