Management of

Business Logistics
Dr. LE THI DIEM CHAU
Dr. TRAN QUYNH LE
Dr. Nguyen Tien Dung
Assoc. Prof. Dr. Le Ngoc Quynh Lam
Industrial Systems Engineering Department
Mechanical Engineering Faculty
Ho Chi Minh City University of Technology (HCMUT)–VNUHCM
CHAPTER 1: Logistics and Supply Chain
Management

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Learning objectives

• Define logistics and supply chain management

• Explain the development of supply chain management.

• Appreciate the importance and role of supply chain management among

organizations.

• Discuss the contributions of a supply chain approach to organizational

efficiency and effectiveness

• Discuss the major challenges and issues facing organizations

developing and implementing supply chain strategies.

• Discuss the major change drivers in the global marketplace

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 To have shirts available at the store for sale, what operations need
to be done?

AIC

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AIC
• What is supply chain management and logistics ?

• Why we care about Logistics and Supply Chain

Management?

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What is Supply Chain Management ?

SUPPLY
LOGISTICS LOGISTICS SUPPLY CHAIN
CHAIN

SUPPLY
LOGISTICS CHAIN

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Definition

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Definition – Supply chain management
A management system that coordinates and integrates all of the
activities performed by supply chain members into a seamless
process, from the source to the point of consumption, resulting in
enhanced customer and economic value.

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Definition – Supply chain management
• SCM is a cross-department and cross-enterprise integration and coordination of material,
information, and financial flows to transform and use the SC resources in the most rational
way along the entire value chain, from raw material suppliers to customers.

• SCM is one of the key components of any organization and is responsible for balancing
demand and supply along the entire value-adding chain.

SUPPLY SIDE DEMAND SIDE

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 Chapter

What is Logistics Management?

▪ Logistics is a function, which inside a supply chain, is responsible for the
efficient organization of the movement and storage of goods and resources,

▪ and for ensuring that the Right product, reaches the Right customer, at the
Right place and Right time, and in the Right quantity and Right condition and
all this, of course, for the Right price – the Seven Rs of logistics.

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What is Logistics
Management?

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What is difference?

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Decision in supply chain and operations
management
▪ When designing and operating a supply chain, what issues are address?

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Decision in supply chain and operations management

• Determination of the size and location of manufacturing

plants or distribution centers
Strategy • Decisions on the structure of service networks.
• Factory planning
• Design of the SC.

• Production planning.
Tactic • Transportation planning.
• Inventory planning.

• Production scheduling and control

• Inventory control
• Quality control and inspection
Operation • Vehicle routing
• Traffic and materials handling
• Equipment maintenance policies.

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The Changing Business Landscape: Five Driving Forces

• The Empowered Consumer

• Power Shift in the Supply Chain

• Deregulation

• Globalization

• Technology

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The Changing Business Landscape: Five Driving Forces

The Empowered Consumer

✓ Impact on logistics is more direct.

✓ Informed consumers have low tolerance for poor quality in products and services.

✓ Changing demographics commands 24/7 service.

✓ Increased customer service increases the importance of logistics and supply chains.

The customers take control

The customer in today’s marketplace is more demanding, not just of
product quality, but also of service

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The Changing Business Landscape: Five Driving Forces

• Power Shift in the Supply Chain

✓ Large retailers more demanding and commanding.

✓ Focus upon distribution costs and their impact on “everyday low prices”.

✓ Changing logistics and supply chain strategies resulted from shifts in the
balance of economic power.

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The Changing Business Landscape: Five Driving Forces

•Deregulation
✓ Changing economic controls empowered creativity and competition.
✓ Changes in transportation – fewer or no economic controls over rates and
services.

✓ Change in financial institutions blurred traditional differences and increased

competition.

✓ Change in the communications industry also resulted in more competition.

✓ Changes in the utility industry allows more competition.

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The Changing Business Landscape: Five Driving Forces

•Globalization
✓ Global marketplace concept
✓ Global network sourcing, manufacturing, marketing and distribution
✓ Global alternatives have blossomed
✓ No geography --- access available to the world
✓ Supply chain challenges
✓ Wal-Mart’s challenges
✓ New supply sources
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The Changing Business Landscape: Five Driving Forces

• Technology

✓ Information Age provides new and unrestricted

access to the place aspect of business.

✓ My time, my place
✓ Warehouse technology has changed dramatically
with computer devices in use from the office
space to the forklifts.

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Managing the 4Rs

• Responsiveness

• Reliability

• Resilience

• Relationships

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Managing the 4Rs

• Responsiveness
✓ Organization is close to the customer, hearing the voice of the market
and quick to interpret the demand signals it receives.
✓ More demand driven than forecast-driven.
✓ making this transition will be through the achievement of agility, not just
within the company but across the supply chain
✓ Agility implies the ability to move quickly and to meet customer demand
sooner.
• Reliability
• Resilience
• Relationships

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The Supply Chain Concept
• Development of the Concept

✓ Total systems cost - remains an important element of logistics analysis.

✓ Outbound logistics - was the initial focus with higher value finished goods.
✓ Inbound logistics – deregulation allowed new focus on coordination of
inbound and outbound movements.

✓ Value chain analysis integrated logistics activities.

✓ Terminology growing as supply chain concept matures.
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Integrated Logistics Management

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Generic Value Chain

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Logistics Supply Chain

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Integrated Supply Chain

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 End of Chapter 1

Logistics and Supply Chain Management