Professional Documents
Culture Documents
Chapter 1
The Immediate Supply Chain for an Individual Firm
Information
flows
Factory
Transportation
Vendors/plants/ports
Warehousing Transportation
1-2
Logistics Defined
Logistics
controllin
Supply Chain Management Defined
SCM is
of raw mth
Evolution of Supply Chain Management
Evolution of Supply Chain Management
Activity fra
Supply Chain Schematic
1-5
The Logistics/SC Mission
Gettin
A Revised Strategy is Generating
Great Top Management Interest
Historical perspective of distribution:
“The last frontier of cost economies”
Peter Drucker, 1962
The contemporary view:
Distribution is a new frontier for demand
generation—a competitive weapon.
Transportation
Customers
Inventory
or supply source
Customer Service Performance
10 96
Order Cycle Time,
9 94 Days
92
8 Product
90 Availability--%
Days
7 orders
%
88 Product
6 Availability--% line
86 items
5 84
4 82
19 2
19 4
19 6
20 8
20 0
02
9
0
9
9
9
19
Year
• Costs are
− About
− About
SCM Spend of 9 Major Indian
Manufacturing Industries
SCM
In-boun Logistics spend
in India is about
13% of GDP
•Costs are lower than K-Mart or
Target Stores
•CEO is a former logistician
•Wal-Mart is the largest retailer in
the world!
Effect on Logistics Foreign Outsourcing
Domestic sourcing Foreign sourcing
Profit Profit Increase
G&A G&A
Marketing Marketing
Logistics Increase
Logistics
Overhead Tariffs
Overhead
Materials
Materials
Labor Reduction
Labor
Scope of the Supply Chain for Most Firms
Business logistics
Sources of Plants/
Customers
supply operations
• Transportation • Transportation
• Inventory maintenance • Inventory maintenance
• Order processing • Order processing
• Acquisition • Product scheduling
• Protective packaging • Protective packaging
• Warehousing • Warehousing
• Materials handling • Materials handling
• Information maintenance • Information maintenance
• Secondary, or supporting
- Warehousing
- Materials handling
- Acquisition (purchasing)
- Protective packaging
- Product scheduling
- Order processing
The Supply Chain is Multi-Enterprise
Scope
in reality
Focus
Company
Suppliers Customers
Supplier’s Customers/
suppliers End users
Int
tio
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org
rdi
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o
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SUPPLY
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fun
CHAIN
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MANAGEMENT
rdi
Int
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Activity and process
administration
Study Framework
Inventory Strategy
• Forecasting Transport Strategy
• Inventory decisions • Transport fundamentals
CONTROLLING
• Purchasing and supply
ORGANIZING
• Transport decisions
scheduling decisions Customer
PLANNING
• Storage fundamentals service goals
• Storage decisions • The product
• Logistics service
• Ord. proc. & info. sys.
Location Strategy
• Location decisions
• The network planning process
The focus is
here
The Logistics Strategy Triangle
Inventory Strategy
• Forecasting
• Storage fundamentals Transport Strategy
• Inventory decisions •Transport fundamentals
• Purchasing and supply •Transport decisions
scheduling decisions
Customer
• Storage decisions service goals
• The product
• Logistics service
• Information sys.
Location Strategy
•Location decisions
•The network planning process
Relationship of Logistics to
Marketing and Production
LOGISTICS
Sample
activities: MARKETING
PRODUCTION/ •Transport Interface Sample
OPERATIONS • Inventory
Interface activities: activities:
Sample activities: • Order • Customer
• Quality control activities: • Promotion
• Product processing service • Market
• Detailed production
scheduling • Materials standards research
scheduling • Plant • Pricing
• Equipment maint. handling • Product
location • Packaging
• Capacity planning mix
• Purchasing • Retail • Sales force
• Work measurement
location management
& standards
Production-
logistics Marketing-
interface logistics
interface
Promotion
Price
Place-Customer
service levels
Transport
Logistics
Inventory
carrying costs costs