ALS 2023

LOGISTICS AND SUPPLY CHAIN

MANAGEMENT

SEMESTER FEBRUARY 2020/2021

INDIVIDUAL ASSIGNMENT

QUESTION:
What is Logistics and Supply Chain Management?
Please discuss in detail.

NAME : MUHAMMAD ZUHAIR BIN ZAKARIA

MATRIC NO : A20F2322

GROUP : ALS2023/L2

LECTURER’S NAME : ABD AZIZ BIN MAT HASSAN

 TABLE OF CONTENTS

No. Content Page Number

1 Table of contents 1
2 1.0 Introduction 2
3 2.0 Definition
2.1 Logistics definition 3–6
2.2 Supply Chain definition
2.3 Supply Chain Management definition
4 3.0 SCOR Model
3.1 SCOR Model Process 7 - 10
3.2 Pros and Cons of SCOR Model

5 4.0 Conclusion 11

6 5.0 References 12 - 13

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1.0 Introduction

These days, the e-commerce industry is developing dramatically inside the Southeast
Asia region especially in Malaysia, Singapore, Indonesia, Thailand, Philippines, and
Vietnam. BMI Research in 2018 reported that these ASEAN countries are set to
contribute an estimated of USD64.8 billion (RM257.9 billion) in 2021 from online
shopping market activity (MIDA, 2020). Share of total online sales retail sales was at 2.7%
for Malaysia and become the second place in the region. The rapid growth of internet
business industry, especially in Malaysia today has made numerous positive results such
as technology adoption among communities and industry player. These positive impacts
had urged numerous SMEs to growth their business and Malaysian logistic players
adopting technological infrastructure inside its business activity. The flourishing
development of internet business industry impacted the logistics industry in Malaysia to
experience a progression of advancement in their activities to shape consistent
satisfaction centres in the country.

Supply chain management is inadequate without logistics. From the starting place to
the mark of utilization, it includes the arranging, execution, and management of items,
administrations, and data. Traffic and capacity, shipment and accepting, import and fare
measures, warehousing, stock control, purchasing, creation arranging, and client service
are all essential for logistics. Logistics is seen by organizations as a fundamental outline
for the supply chain. It's utilized to put together, organize, and screen the assets needed to
move products in a consistent, opportune, financially savvy, and reliable way (MSU,
2019).

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2.0 Definition

2.1 Logistics definition

What is term of logistic? “Logistics” was at first military-based term used regarding
how military work force got, stored, and move equipment and supplies. The term is
currently use broadly in business sector, especially by organizations in the assembling
areas, to refer to how resource is taken care and move along the supply chain. Logistic
also can defined as the management of corporate activities acquisition, storage, moving
and delivery of goods within the supply chain. Any boundary in supply chain will
affected the delayed or late of delivery services. The situation suggests that logistics
management is critical part in organization that decides the organization success. Council
of Logistics Management (1991) defined that logistics is “part of the supply chain process
that plans, actualizes, and controls the productive, effective forward and reverse flow and
storage of goods, and related data between the purpose of assembling and the point of
utilization so as to meet client’s prerequisites” (Wood, 2020). In the other words, logistics
describes the overall process of managing how resources are acquired, stored, and item
moving into and out of firm.

The management of logistics can involve some or all of the following business
functions, including inbound transportation, outbound transportation, fleet management,
warehousing, materials handling, order fulfilment, inventory management and demand
planning. Although many small businesses focus on the design and production of their
products and services to best meet customer needs, if those products cannot reach
customers, the business will fail. That’s the major role that logistics plays. But logistics
also impacts other aspects of the business, too. The more efficiently raw materials can be
purchased, transported, and stored until used, the more profitable the business can be.
Coordinating resources to allow for timely delivery and use of materials can make or
break a company. And on the customer side, if products cannot be produced and shipped
in a timely manner, customer satisfaction can decline, also negatively impacting a
company’s profitability and long-term viability

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2.2 Supply chain definition

From the initial stage of sourcing raw materials to the final distribution of the
product or service to end-users, a supply chain is an entire method of manufacturing and
distributing a product or service. The supply chain sets out all facets of the manufacturing
process, including the activities that take place at each point, knowledge that is shared,
natural resources that are converted into useful products, human resources, and other
components that go into the final product or service.

A supply chain, in its most basic form, is the set of activities needed by an
organisation to distribute products or services to customers. A supply chain is a focus on
the core activities needed to turn raw materials or component parts into finished goods or
services within our organisation. In a traditional manufacturing setting, the activity of
interacting with suppliers is generally supported by "Procurement." Materials will then
pass through goods in warehouses (if products), through the manufacturing site, and into
the finished goods warehouse, which is the core activity of "Operations Management", in
order to ensure that the final product moves downstream to the customer, logistics will
play a critical role in the transportation of inbound materials and outbound products
across the supply chain. A supply chain may be either product-based or service-based,
with resources coming together to provide an overall customer service rather than a
finished product. An example of this is the shipment of customers' products, where
personnel, vessel supply, and fuel are all needed to provide the shipping service to the
user (CIPS, 2020).

There are two example of supply chain which is generic supply chain and supply chain
for an e-commerce company.

Generic Supply Chain

The procurement and extraction of raw materials is the first step in the generic
supply chain. A logistics company then transports the raw materials to a retailer, who
serves as the wholesaler. The materials are sent to a producer, or more likely, a number of
manufacturers, who refine and process them into a finished product. It then goes to a
dealer, who wholesales the finished product before delivering it to a store. Consumers
buy the product from the manufacturer in a supermarket. The cycle is completed until the
buyer purchases it, but the demand then stimulates the output of more raw materials, and
the cycle continues.

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Supply Chain for e-Commerce Company

Next is supply chain for an e-commerce company. The e-commerce business in

this case runs a website that offers a variety of items. When a customer places an order
for a product, technology such as a checkout cart, an order system, or a third-party
product like Shopify processes the order. The payment processors then step in to handle
the order's payment transactions, effectively creating a new supply chain. Payment
processors have their own programmes, but in the majority of cases, third parties such as
PayPal and Stripe are used, and banks and other suppliers are involved. When a product
order is placed, the warehouse receives it and checks to see if the product is ready to ship.
A third-party logistics supplier or an in-house warehousing company may be used. The
order is then delivered to the shipping company from the warehouse. Shipping may be
done in-house or by a third-party shipping firm. After shipping, the package arrives at the
customer’s door and the customer receives it (CFI, 2020).

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2.3 Supply chain management definition

A supply chain is described as the entire process of producing and selling

commercial products, including all stages from material procurement to product
manufacture to distribution and sale. Any business that wants to succeed must be able to
manage its supply chains effectively. The management of the movement of goods and
services is referred to as supply chain management, and it encompasses all processes that
turn raw materials into finished goods. It entails actively streamlining a company's
supply-side operations in order to increase consumer satisfaction and achieve a
competitive edge in the industry. Supply chain management (SCM) refers to
manufacturers' efforts to design and execute supply chains that are as reliable and cost-
effective as possible. Supply chains include everything from manufacturing to product
creation, as well as the information systems used to coordinate these activities. (Fernando
J., 2021).

Supply chain management (SCM) is the successful management of supply chain

operations in order to increase customer value and maintain a competitive edge over time.
It is a deliberate effort on the part of supply chain companies to develop and run supply
chains in the most effective and reliable manner possible. Brand growth, procurement,
manufacturing, and logistics, as well as the information systems required to manage these
activities, are all covered by supply chain activities. The Supply Chain Management
(SCM) principle is based on two main concepts. The first is that practically every product
that reaches an end user represents the cumulative effort of multiple organizations. These
organizations are referred to collectively as the supply chain. The second idea is that
while supply chains have existed for a long time, most organizations have only paid
attention to what was happening within their “four walls.” Few companies comprehended,
far less controlled, the entire chain of events that led to the final delivery of goods to the
consumer. As a result, supply chains were disjointed and sometimes inefficient.

According to Mentzer et al., (2001), SCM requires traditionally separate materials

functions to report to an executive responsible for coordinating the entire materials
process, and also requires joint relationships with suppliers across multiple tiers. SCM is
a concept, “whose primary objective is to integrate and manage the sourcing, flow, and
control of materials using a total systems perspective across multiple functions and
multiple tiers of suppliers.”

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3.0 SCOR Model

The Supply Chain Operations Reference (SCOR) is a management tool that helps
companies discuss, improve, and communicate supply chain management decisions
internally as well as with their suppliers and customers. The Supply Chain Council
developed the (SCOR) model in 1996 (Zhou et, al., 2011). Customer interactions,
physical transactions, and business interactions are all part of the SCOR model, which
focuses on the supply chain management function from an organisational process
perspective. Many firms, including Intel, General Electric (GE), Airbus, DuPont, and
IBM, have adopted the SCOR model over the last decade. The model represents the
business processes that are needed to meet a customer's needs. It also helps in the
explanation of processes in the supply chain and provides a foundation for improving
those processes.

3.1 SCOR Model Process

Plan

This first phase includes demand and supply preparation and management. Resources
must be balanced against requirements, and coordination must be established across the
chain. Determining market rules to boost and calculate supply chain productivity is also
part of the strategy. These business rules cover a wide range of topics, including
inventory, transportation, properties, and regulatory enforcement. The supply chain
strategy is therefore aligned with the company's financial plan. Companies must develop
a plan to manage all of the resources necessary for developing goods and delivering
services. The main focus in supply chain management is on planning and developing a
collection of metrics.

Source

Following planning, the next step is to build or source. The infrastructure and material
acquisition steps are described in this step. This entails not only locating dependable
suppliers, but also deciding various shipping, distribution, and payment methods for the
product. Companies must choose suppliers to provide the materials and services they
need to produce their product. As a result, supply chain managers must develop a
collection of pricing, distribution, and payment processes with suppliers, as well as

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metrics for monitoring and strengthening relationships, at this level. Finally, supply chain
administrators may combine both of these procedures to handle their products and
provide service to their customers.

Make

The manufacturing or making of customer-demanded goods is the third phase in the

supply chain management process. The products are developed, manufactured, checked,
packed, and scheduled for delivery at this level. The supply chain manager's job is to plan
all of the activities necessary for production, testing, packaging, and distribution planning.
This stage of the supply chain is the most metric-intensive, with firms able to assess
quality levels, production output, and worker productivity.

Deliver

The delivery stage is the fourth stage. The supplier delivers the goods to the customer
at the specified venue. This is essentially the logistics level, where customer orders are
approved and goods delivery is scheduled. Order processing, warehousing, and logistics
are also part of the delivery process. It also entails accepting customer orders and
invoicing them until the product has been delivered. Management of finished inventories,
assets, transportation, product life cycles, and importing and exporting requirements are
all part of this step.

Return

The return is the final and most important stage of supply chain management.
Business laws, return inventory, cash, transportation, and regulatory requirements are all
part of the return process. The customer returns faulty or damaged products to the
supplier at this time. Companies must deal with consumer inquiries and concerns, among
other things. For many businesses, this stage of the supply chain is a source of frustration.
The planners of supply chain need to discover a responsive and flexible network for
accepting damaged, defective and extra products back from their customers and
facilitating the return process for customers who have issues with delivered products.

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3.2 Pros and Cons of SCOR Model

Pros

To assist a company in analysing the supply chain, the SCOR process can go into
several levels of process detail. It gives businesses an idea of how far along their supply
chains are. The method enables businesses to comprehend how the five steps replicate
themselves between suppliers, the organisation, and customers. Each phase is a critical
link in the supply chain for moving a product successfully through each stage. Faster
cycle times, less inventories, better supply chain visibility, and timely access to essential
customer information were all advantages of implementing the SCOR model (Zou et al.,
2011). The SCOR method has many advantages, one of which is its high credibility.
Thousands of businesses have invested in SCOR model, and their supply chains have
improved significantly. It is a systematic approach that aids in the identification of areas
for change. Its systematic approach enables businesses to assess their current position and
supply chain maturity. Standardized metrics are the next step, and they assist
organisations in obtaining a practical, impartial measure of departmental and functional
efficiency. Ingersoll Rand was able to develop a shared business language as well as
quantify individual success by deploying SCOR model around the enterprise. They
discovered the importance of APICS certification in production and inventory
management (CPIM) during the process because qualified managers had faster inventory
turns and lower backlogs. Finally, there are universal scorecards, which can be used to
assess supply chain output in depth. Balanced scorecards enable an entity to assess
various divisions and assign a score based on clearly specified parameters. They aid in the
evaluation of suppliers and the evaluation of results within the market segment
(Riverlogic, 2019).

Cons

While SCOR has helped many organisations, it should be noted that it was created at
a time when business management software was still in its infancy. Although the method
is still applicable today, it has not kept up with changes in market practises or
technological advancements in several respects. The lack of versatility and animation,

9
according to Persson (2011), are disadvantages of using a SCOR-based simulation tool.
There's also a chance that truth will be 'altered' to match SCOR's method definitions
rather than the other way around. Although several organisations have attempted to
computerise their systems, manual calculation and assessment are still widely used.
Though BI software makes it easier to find answers, the thorough implementation,
tracking, and review processes take time. The next thing to consider is that SCOR
systems are essentially static, evaluating output at a specific point in time. Although
historical reporting is useful for determining past results, the time delays inherent in any
scorecard measurement indicate that the current condition differs from what was
calculated previously. To direct their decision-making, organisations need information
that is recent, not days, weeks, or months old. The fact that assessments aren't directly
actionable is another major problem. There is no way to decide the best course of action
other than to repeat the engage, identify, evaluate, prepare, and launch cycle. In dynamic
contexts, though, there's no way of knowing whether the work done during the cycle was
correct but in retrospect. All this takes time, and organizations today need better tools to
dynamically optimize supply and demand issues (Riverlogic, 2019).

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4.0 Conclusion

In conclusion, the logistics industry has become the most important industry because
many industries now use logistics services. Logistics refers to how resources are managed
and transported through the supply chain and is commonly used in the business sector,
especially by companies in the manufacturing sector. From the point of origin to the point of
consumption, it entails the preparation, execution, and management of products, services, and
information. Traffic and storage, shipment and receiving, import and export processes,
warehousing, inventory control, buying, production planning, and customer support are all
part of logistics As we all know, a supply chain is an entire mechanism for manufacturing
and distributing a product or service, from the initial stages of purchasing raw materials to the
actual distribution of the product or service to end-users. There are two types of supply chains:
conventional supply chains and supply chains for e-commerce companies. The Supply Chain
Operations Reference (SCOR) is a model created by the Supply Chain Council to enhance the
entire supply chain process. The SCOR model has five processes that are interconnected to
ensure that the supply chain runs smoothly: design, source, make, deliver, and return. Lastly,
the SCOR model gives some benefits to the supply chain process but also have some
disadvantages in the model.

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5.0 REFERENCES

CFI (2020). What is a Supply Chain? Retrieved from

https://corporatefinanceinstitute.com/resources/knowledge/strategy/supply-chain/

CIPS (2020). What is a Supply Chain? Retrieved from

https://www.cips.org/knowledge/procurement-topics-and-skills/supply-chain-

management/what-is-a-supply-chain/

Fernando J. (2021). What Is Supply Chain Management (SCM). Retrieved from

https://www.investopedia.com/terms/s/scm.asp

Mentzer, J., DeWitt, W., Keebler, J. S., Nix, N. W., & Smith, C. D. (2001). DEFINING

SUPPLY CHAIN MANAGEMENT. JOURNALOF BUSINESS LOGISTICS. Vol 22.

No. 22.

MIDA (2020). E-Commerce: A Game Changer for Logistica Industry in Malaysia. Retrieved

from https://www.mida.gov.my/e-commerce-a-game-changer-for-logistics-industry-

in-malaysia/

MSU (2019). Why Logistics is Fundamental to Supply Chain Success. Retrieved from

https://www.michiganstateuniversityonline.com/resources/supply-chain/logistics-

fundamental-to-supply-chain-success/

Persson, F. (2011). SCOR template—A simulation based dynamic supply chain analysis tool.

International Journal of Production Economics, 131(1), 288-294.

Riverlogic (2019). The Ultimate SCOR Model for Supply Chain Decision. Retrieved from

https://www.riverlogic.com/blog/the-ultimate-scor-model-for-supply-chain-decisions

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Wood, D. F. (2020, November 12). Logistics. Encyclopedia Britannica. Retrieved from

https://www.britannica.com/topic/logistics-business

Zhou, H., Benton Jr, W. C., Schilling, D. A., & Milligan, G. W. (2011). Supply chain

integration and the SCOR model. Journal of Business Logistics, 32(4), 332-344.

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