Introduction to Logistics and SCM

Logistics supports activities of companies at their inputs, throughput or operations and at their output.

INPUTS

OPERATIONS

OUTPUTS

Logistics has an important role towards customers, as well as towards suppliers..

Inputs, operations, output

INPUTS

OPERATIONS

OUTPUTS

People Buildings Raw materials Equipments Information Investment Etc.

Manufacture Serve Supply Transport Sell Train Etc.

Goods Services Profits Waste Wages Etc.

ROLE OF LOGISTICS
External supplier Operations within the organization Internal supplier Internal customer External customer

Materials Management Outbound Logistics Logistics

Inbound
Logistics

DEMAND AND SUPPLY CYCLE

PASSED TO CUSTOMERS CREATE

SUPPLY OF PRODUCTS

DEMAND FOR PRODUCTS

ARRANGE OPERATIONS

PASSED TO

OTHER OUTPUTS

OTHER INPUTS

LOGISTICS
Logistics is the function responsible for the flow of materials from suppliers into an organization, through operations within the organization, and then out to customers. The supply system includes the process of planning, implementing, and controlling the efficient, effective flow and storage of goods and services from the organization from its place of production to the place where it is required. This supply system is referred as Logistics Management.

MATERIALS

Materials are all the things that an organization moves to create its products. These materials can be tangible (such as raw materials) and intangible (such as information).

EXAMPLE OF SUPPLY CHAIN

Supplier Manufacturer Customer Wholesaler Retailer

Supplier

Customer

PROCESS OF SUPPLY CHAIN INTEGRATION

Enterprise Systems

Deliver Source Make Deliver Source Make Deliver Source Make Deliver

Source

Subsupplier

Supplier

Enterprise

Customer

Subcustomer

SUPPLY CHAIN MANAGEMENT DEFINITION

A supply chain consists of activities and organizations that materials move through on their journey from initial suppliers to final customers. As goods and services flow from supplier to producer to customer to final user, supply chain management is concerned with the interfaces between organizations. SCM is the management of linkages between organizations. SCM is a network of the manufacturers suppliers, and suppliers suppliers on the one hand and customers and customers customers on the other hand. This network exists to ensure a free and smooth flow of information, goods, services and profits among all its participants.

SC of milk
Supplier MILK Customer FARM TANKER COLLECTION DAIRY

Supplier

Customer
Supplier Customer supplier DISTRIBUTER Customer Supplier BOTTLING PLANT Customer Supplier

Customer SUPER MARKET Customer

OBJECTIVES OF SUPPLY CHAIN

To reduce the physical supply chain links; To define supply chain responsibilities to a core service competency To decrease the time and cost of getting end user customer products in required quantity at the place of requirements.

ACTIVITIES IN A SUPPLY CHAIN

Upstream activities

Initial Supplier

3rd tier Supplier

2nd tier Supplier

1st tier Supplier

Organization

Final customer

3rd tierl customer

2nd tierl customer

1st tier customer

Downstream activities

SUPPLY CHAIN AROUND A MANUFACTURER

3rd tier Supplier 2nd tier Supplier Material Component Supplier Supplier 1st tier Supplier Subassembly Supplier

Manufacture

3rd tierl customer End users

2nd tierl customer Retailers

1st tier customer Wholesalers

MOVEMENT WITHOUT A WHOLESALER

Factories

24 routes

customers

MOVEMENT WITH A WHOLESALER

Factories
3 routes inwards

WHOLESALER
8 routes outwards

customers

Using intermediaries simplifies the supply cahin

BENEFITS OF WELL DESIGNED SUPPLY CHAIN -1

Best location of operations, regardless of the location of customers. Concentrating operations in large facilities, benefits of economies of scale obtained. Producers do not keep large stocks of finished goods, as the same are kept down the supply chain nearer to customers. Higher price discouts to wholesalers due to large order size.

BENEFITS OF WELL DESIGNED SUPPLY CHAIN - 2

Wholesaler keeps stocks of many suppliers, giving retailers a choice of goods. Wholesalers are near to retailers and have short lead time. Retailers carry less stocks as wholesalers provide reliable deliveries. Retailers can have small operations, giving a responsive service near to customers. Transport is simpler with fewer, larger deliveries thus reducing costs. Organization can develop expertise in specific types of operations.

SUPPLY CHAIN FOR PAPER

Grown by gardener Planted by forester Young Tree Mature Tree Felled by logger Logs

Seedling

Chipped
Finishing Small roll of Finished paper Cutting Transport Sheets of paper Packer Transport Wholesaler Transport Retailer Processed Processed Raw Paper Wood Pulp

Large roll of paper

Final Customer

Purchase

ACTIVITIES OF LOGISTICS
Procurement / purchasing Inward transport Receiving Warehousing

Stock control

Order picking

Materials handling

Outward transport

Physical distribution of finished goods

Recycling, returns, and waste disposal

Locations

communication