1 - supply chain
TRANSCRIPT
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Business Logistics
Supply Chain
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Logistics DefinedLogistics is the process of planning, implementing and
controlling the efficient, cost-effective flow and storageof raw materials, in-process inventory, finished goodsand related information from the point of origin to pointof consumption for the purpose of conforming tocustomer requirements.
Council of Logistics Management
Supply Chain Management DefinedSCM is the integration of all activities associated with the
flow and transformation of goods from raw materialsthrough to end user, as well as information flows, through
improved supply chain relationships, to achieve a
sustainable competitive advantage.
Handfield and Nichols
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Warehousing
Warehousing
Transportation
Transportation
Vendors/plants/portsTransportation
Factory
Transportation Customers
Information
flows
The Immediate Supply Chain for an Individual Firm
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Supply Chain Schematic
1-5
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Demand forecasting
Purchasing
Requirements planning
Production planning
Manufacturing inventory
Warehousing
Material handling
Packaging
Finished goods inventory
Distribution planning
Order processing
Transportation
Customer service
Strategic planning
Information services
Marketing/sales
Finance
Supply Chain
Management
Supply Chain
Management
Logistics
Purchasing/
Materials
Management
Physical
Distribution
Activity fragmentation to 1960 Activity Integration 1960 to 2000 2000+
Demand forecasting
Purchasing
Requirements planning
Production planning
Manufacturing inventory
Warehousing
Material handling
Packaging
Finished goods inventory
Distribution planning
Order processing
Transportation
Customer service
Strategic planning
Information services
Marketing/sales
Finance
Supply Chain
Management
Supply Chain
Management
Logistics
Purchasing/
Materials
Management
Physical
Distribution
Activity fragmentation to 1960 Activity Integration 1960 to 2000 2000+
Evolution of Supply Chain Management
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The Logistics/SC Mission
Getting the right goods or services
to the right place, at the right time,
and in the desired condition at the
lowest cost and highest return on
investment.
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A Revised Strategy is Generating
Great Top Management Interest
Historical perspective of distribution:The last frontier ofcost economies
The contemporary view:Distribution is a new frontier fordemand
generationa competitive weapon.
Peter Drucker, 1962
Both views arenow important!
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Customers
Transportation
Inventory
or supply source
Customer order processing (and
transmittal)
Customers
Transportation
Inventory
or supply source
Customer order processing (and
transmittal)
Critical Customer Service
Loop
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Category Percent of sales $/cw t.
Transportation 3.34% $26.52
Warehousing 2.02 18.06
Order entry 0.43 4.58Administration 0.41 2.79
Inventory carrying 1.72 22.25
Total 7.65% $67.71
Physical Distribution Costs
Add one-third for inbound supply costs
Source: Herb Davis & Company
Logistics cost
are about 10% of
sales w/o
purchasing costs
Hundredweight
100 lbs
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Effect on Logistics Foreign Outsourcing
ProfitG & A
Marketing
Logistics
Overhead
Materials
Labor
ProfitG & A
Marketing
Logistics
Overhead
Materials
Labor
Tariffs
Increase
Reduction
Increase
Domestic sourcing Foreign sourcing
Gastos generales
Gastosindirectos
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Scope of the Supply Chain for Most Firms
Physical distributionPhysical supply(Materials management)
Business logistics
Sources ofsupply
Plants/operations
Customers
Transportation Inventory maintenance Order processing Acquisition
Protective packaging Warehousing Materials handling Information maintenance
Transportation Inventory maintenance Order processing Product scheduling
Protective packaging Warehousing Materials handling Information maintenance
Focus firms internal supply chain 1-14
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Primary
- Setting customer service goals- Transportation- Inventory management- Location
Secondary, or supporting- Warehousing- Materials handling
- Acquisition (purchasing)- Protective packaging- Product scheduling-Order processing
Key Activities/Processes
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Focus
Company
Suppliers
Supplierssuppliers
Customers
Customers/End users
Acquire Convert Distribute
The Supply Chain is Multi-Enterprise
Product and information flow
Scope in
reality
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PLAN
NING
ORGANIZING
CONTRO
LLING
Transpo rt Strategy
Transport fundamentals
Transport decisionsCustomer
service goals
The product
Logistics service Ord. proc. & info. sys.
Inventory Strategy
Forecasting
Inventory decisions
Purchasing and supply
scheduling decisions
Storage fundamentals
Storage decisions
Lo cation Strategy
Location decisions
The network planning process
PLAN
NING
ORGANIZING
CONTRO
LLING
Transpo rt Strategy
Transport fundamentals
Transport decisionsCustomer
service goals
The product
Logistics service Ord. proc. & info. sys.
Inventory Strategy
Forecasting
Inventory decisions
Purchasing and supply
scheduling decisions
Storage fundamentals
Storage decisions
Lo cation Strategy
Location decisions
The network planning process
Study Framework
The focus ishere
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Customerservice goals The product Logistics service Information sys.
Inv entor y Strategy
Forecasting
Storage fundamentals
Inventory decisions
Purchasing and supply
scheduling decisions Storage decisions
Transpo rt Strategy
Transport fundamentals
Transport decisions
Lo cat ion Strategy
Location decisions
The network planning process
The Logistics Strategy Triangle
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PRODUCTION/OPERATIONSSample activities:Quality controlDetailed production
schedulingEquipment maint .Capacity planningWork measurement
& standards
LOGISTICSSampleactivities:TransportInventory
Orderprocessing
Materialshandling
Interface
activities:Product
schedulingPlant
locationPurchasing
MARKETINGSampleactivities:PromotionMarket
researchProduct
mixSales force
management
Interfaceactivities:
Customerservicestandards
PricingPackagingRetail
location
Production-logisticsinterface
Marketing-logisticsinterface
Relationship of Logistics to
Marketing and Production
Internal Supply Chain1-21
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Relationship of Logistics to Marketing
Product
PricePromotion
Place-Customer
service levels
Inventory
carrying costs
Lot quantity
costs Order processing
and information
costs
Transport
costs
Warehousing
costs
Lo
gistics
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Relationship of Logistics to Production
Coordinates through scheduling and strategy make-to-orderormake-to-stock
An integral part of the the supply chain
Affects total response time for customers
Shares activities such as inventory planningCosts are in tradeoff (compensacin)
Production lot quantities affect inventorylevels and transportation efficiency
Production response affects transportationcosts and customer service
Production and warehouse location areinterrelated
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Logistics/SC in Diverse Areas
Manufacturingmost common
Environmentcausing restrictions
Serviceemerging opportunities
Non-profitslittle explored (no lucro)
Militarylong history
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Contemporary Logistics Terms
Value stream/logistics processQuick response and flexiblemanufacturingMass customizationSupply chain management/collaborative logisticsReverse logistics
Service logisticsContinuous replenishmentLean logistics
Integrated logistics