Logistic and Supply Chain Management

What Is the Supply Chain?

Supply chain activities transform natural resources, raw material and components into a finished product that is delivered to end consumer.

A set of approaches used to efficiently integrate Suppliers Manufacturers Warehouses Distribution centers

So that the product is produced and distributed In the right quantities To the right locations And at the right time

System-wide costs are minimized and Service level requirements are satisfied

What Is Supply Chain Management?

End UserEnd User

Selling & DistributionSelling & Distribution

ManufacturingManufacturing

WarehousingWare

housing

MovingMoving

Process of Supply Chain Management

CUSTOMERSMATERIAL SUPPLIERS

SERVICE SUPPLIERS

•Reduced inventory• Increased revenue• Lower order management costs• Higher Gross Margin• Better forecast accuracy• Better allocation of promotional budgets

•Reduced inventory• Lower warehousing costs• Lower material acquisition costs• Fewer stockout conditions

•Lower freight costs• Faster and more reliable delivery• Lower capital costs• Reduced depreciation• Lower fixed costs

• Improved customer service• More efficient use of human resources

Benefits of Supply Chain

Supply Chain Elements

• Supply Chain Design• Resource Acquisition• Long Term Planning (1 Year ++)`

• Production/ Distribution Planning• Resource Allocation• Medium Term Planning (Qtrly, Monthly)

• Shipment Scheduling• Resource Scheduling• Short Term Planning (Weekly,Daily)

Strategic

Tactical

Operational

The 3 Ts

Key IngredientsFor ImprovingSupply ChainEfficiencies

TimelinessVelocity

Acceleration

Trust

Collaboration

Empowerment

SharingInformation(eg. open schedules)

Accountability

Understanding the process

Transparency Ability to see the real situation

The 3 T’s in SCM

Inventory and back-order levels fluctuate considerably across the supply chain even when customer demand doesn’t vary

The variability worsens as we travel “up” the supply chain Forecasting doesn’t help!

SCM and Uncertainty

Manufacturer

Wholesale

Distributors

Consumers

Multi-tier

SuppliersRetaile

rs

Time

Sale

s

Sale

s

Time

Sale

s

Time

Sale

s

Time

Bullwhip Effect

Volatility amplification along the network Increase in demand variability as we move

upstream away from the market Mainly because of lack of communication and

coordination Delays in information and material flows

What is Bullwhip Effect

Bullwhip Effect Factors contributing to the Bullwhip Effect:

Forecast Errors Lead Time Variability Batch Ordering Price Fluctuations Product Promotions Inflated Orders

Methods intended to reduce uncertainty, variability, and lead time:

Vendor Managed Inventory (VMI) Just In Time replenishment (JIT) Strategic partnership

SCM is one small part of logistics.

LOGISTIC

SCM

SCM

LOGISTIC

The relabeling perspective simply renames logistics; what was logistics is now SCM.

“Logistics “ originated in military The word logistics has originated from the Greek word

Logistikos and the latin word logisticus meaning the science of calculating and computing.

In ancient time it was more in connection with the art of moving armies and supplies of food and armaments to the war front.

The usage of this word can be traced back to the 17th century, when it was probably used in the first time by the French army .

Origin of Logistic

Logistics is the management of the flow of goods between the point of origin and the point of destination in order to meet the requirements of customers or corporations. Logistics involves the integration of information, transportation, inventory, warehousing, material handling, and packaging, and often security.

What is Logistics

Refers to “interrelation & management of all activities involved in making products and raw materials available for manufacturing and in providing finished products to customers when, where and how they are desired.”

Logistics-the Business Arena

1) Inbound logistics: This includes movement of raw materials and components for processing from the supplier to manufacturer.

2) Process logistics: This includes storage and movement of raw material and components within the manufacturing premises.

Logistics, a 3-Phase view

SourcingOrder

Placement & Expediting

Vendor Supplier

Receiving Transportation

3)Outbound logistics: This includes warehousing , transportation, and

inventory management of finished goods.

Order Processing

Order Transmission

Customer Order

Order Selection Order Transportation

Customer Delivery

Logistics, a 3-Phase view

Logistic Process

consignor Bagging Scan

Out ScanOrigin airport

Dest. Airport

Out Scan

Delivery

Sheet

pick up Data Entry

ManifestTransfer challan

In Scan Area In Scan

Delivery

Security In Scan

In ScanConnection

Out Scan Transfer challan

Consignee

Check

Scan

Logistics covers the following functional areas, termed as ‘Logistics Mix’ by Martin Christopher.

1. Information Maintenance: Collection and storage Data analysis

2. Warehousing Space determination Warehouse configuration Stock layout and planning

The Logistics concept - a ‘system’ approach

3. Inventory Management : Stock level policies Short term sales forecasting Product mix by location Stocking location

4. Protective Packaging: Design for handling Design for storage Design for protection

The Logistics concept - a ‘system’ approach

5. Transportation: Mode & carrier selection Carrier route planning Vehicle scheduling

The Logistics concept - a ‘system’ approach

1. Inventory Reduction: Through the financial accounting perspective, inventory is an

asset and does not cause any appreciable disadvantage, even when stocked in excess.

Traditionally, firms carry excess inventory for the purpose of extending excellent customer service.

Efficient and reliable logistics will help eliminate costs of maintaining excess inventory and excellent customer service even without excess inventory.

Objectives of Logistic Management

2. Reliable and consistent delivery performance- to retain customers:

Timely delivery is crucial to the customer to keep up his production schedule

This will help in building customer confidence and contribute to creating long term relationships.

3. Freight economy: Freight is the major cost element in logistical cost. This can be reduced by adopting measures like freight consolidation ,transport mode selection, route planning, long distance shipments etc.

Objectives of Logistic Management

4. Minimize product damages: Product damage adds to the logistics cost. The reason for product damages are improper logistical

packaging, frequent consignment handling, etc.

5. Quick response: This aspect is related to the capability of the firm to respond

to the customer in the shortest time frame. The usage of latest technologies in information processing

and communication will enhance the capabilities in terms of accuracy and time.

Faster decision making results

Objectives of Logistic Management

1. External: Globalisation Technology Challenging nature of the work force Environmental concerns2. Internal: Customer service and quality Third party networks Supply chain management Changes in management and organization style

Current Logistic Related Issue

1. Performance: Better service for customers Improved productivity Assess just in time and quick response needs

2. System structure: Better relationship with vendors, customers and third parties to more

effectively manage the supply chain Better relationship within and across the organization.

3. Technology integration: Better information systems that connect functions and organizations Combine information and material handling systems for increased efficiency

and effectiveness.

Steps to mitigate the issues

Thank You