You are on page 1of 37

LOGISTICS & SUPPLY CHAIN MANAGEMENT

Well . . . . Is This Logistics ?

Actually . . . . . This Is Logistics

” ( COUNCIL OF LOGISTICS MANAGEMENT/USA) ITS ORIGINS BELONG TO MILITARY OPERATIONS RELATING TO THE COMPLETE SYSTEM OF MOVING. IN TODAY’S HIGHLY COMPETITIVE INDUSTRIAL SCENARIO OF GLOBAL COMPETITIVENESS. SUPPLYING AND QUATERING TROOPS AND ALL THE RESOURCES THEY NEED. LOGISTICS HAS TRULY BECOME A STRATEGIC WEAPON AND MOST IMPORTANT FACTOR IN THE SUPPLY CHAIN .Logistics Management LOGISTICS …………IS “THE PROCESS OF PLANNING IMPLEMENTING AND CONTROLLING THE EFFECTIVE AND EFFICIENT FLOW AND STORAGE OF GOODS. SERVICES AND RELATED INFORMATION FROM THE POINT OF ORIGIN TO THE POINT OF CONSUMPTION FOR THE PURPOSE OF CONFORMING TO CUSTOMER REQUIREMENTS.

. in the best condition and at an acceptable cost. for the right customer at the right cost. in the right quantity and right quality.Contd…… “Getting the right product to the right place in the right quantity at the right time. in the right way. in the right place at the right time. the right product.Logistics involves getting. “ (The Chartered Institute of Logistics & Transport) Logistics involves „8 Rs‟.

Global : Logistics Industry Scenario    The logistics industry is valued at US$ 3. The sector currently employs over 40 million people in the world Global Industry Verticals . The U. spends close to 9% of its GDP on logistic services.5 trillion.S.40% Consumer 23% Retail 17% U..S Europe Japan Health Care 4% Industrial 19% .90% 10% 11. which contributes to over 25% of the global industry value.Logistics Activity Others 4% Automotive 10% Chemical 4% Technology 19% Countries Logistics Cost / GDP Countries India/China Logistics Cost/GDP 13-15% 9.

India logistics industry has only 14.  Indian logistics industry is at an inflection point and will reach a market size of over $125 billion in year 2010.  The industry would need 4.  Technological change in the logistics industry demands a trained workforce in all areas of the sector. .  The organized logistics. by 2015.India : Logistics Industry Scenario  Total GDP US$ 3 Trillion.  Currently. which is about 6% of the total logistics market. 35.  India logistics market to double by 2012.  India spends 13% of its GDP on logistics compared to an average of 10% in other developing countries. is growing @ 15-20% a year.000 .20.000 Warehouse Managers but required are approx.000 skilled people in the ‘Senior Resource Category’ in warehouse management it self.

material handling. 1. Information flow. and are termed as Logistics Mix by Martin Cristopher.Order registration.Handling & damage prevention . order processing. coordination 2. Packaging. order checking & editing.Material storage. Warehousing. despatch documentation 3. site selection & network planning.Logistics Mix Logistics covers the following functional areas.

6. 3. Order processing Inventory management Warehousing Transportation Material handling & storage system Logistical Packaging Information . 4. 5. 2.Logistics Functions The major logistics functions are: 1. 7.

Inventory reduction 2. Reliable and consistent delivery performance 3. Minimum product damages 5. Quick response . Freight economy 4.Objectives of Logistics Management The objective of Logistics management are: 1.

warehouses. in fulfilling a customer request. directly or indirectly.What is Supply chain? Supplier Manufacturer Distributor Retailer Customer  Consists of all parties involved. . but also transporters. retailers & even customers. include not only manufacturers & suppliers.

Is supply chain so simple? Supplier Manufacturer Distributor Retailer Customer Supplier Manufacturer Distributor Retailer Customer Supplier Manufacturer Distributor Retailer Customer Upstream Downstream .

Basic Supply Chain Process Export & Manufacture Import & Raw Materials Activities Primary Movement Distribution Centres Secondary Movement B2B & B2C Distribution After-Sales Services Suppliers Distribution Production Distribution Sales Channel Supply Logistics Value-Added Services End User After Sales Logistics Inbound Logistics Manufacturing Logistics Distribution Logistics Reverse Logistics .

Definition Of Supply Chain American Production & Inventory Control Society(APICS) defines Supply Chain as: “The processes from the initial raw materials to the ultimate consumption of the finished product linking across supplier-user companies” “The functions within and outside a company that enable the value chain to make products & provide services to the customer”  .

design. information and finance along the supply chain to deliver superior value to the end customer in an effective & efficient manner .& control of flow of material.SUPPLY CHAIN MANAGEMENT(SCM) Supply chain management involves planning.

Evolution of Supply Chain Management Statement made by the chief executive of an automobile industry: “Our aim is always to arrange the material & machinery and to simplify the operations so that practically no orders are necessary. So is most of our raw material inventory. Our Finished inventory is in transit. Our production cycle is about eighty-one hours from the mine to the finished machine(automobile) in the freight car.” .

 The First Revolution(1910-1920): The Ford Supply Chain The Second Revolution(1960-1970): The Toyota Supply Chain The Third Revolution(1995-2000): The Dell Supply Chain   .Contd……………….

The value a supply chain generates is the difference between what the final product is worth to the customer and the costs the supply chain incurs in filling the customer‟s request  Reduced inventory.  . reduced warehouse costs. reduced lead times. helps in forecast accuracy.Objective of Supply Chain Objective of every supply chain should be to maximize the overall value generated.

 Objective is to be able to have the right products in the right quantities (at the right place) at the right moment at minimal cost.Contd….. .

Major Drivers of Supply Chain The major supply chain drivers are: 1. 4. Production Inventory Location Transportation Information . 5. 2. 3.

Importance of the Supply Chain Major trends that have emerged to make supply chain management a critical success factor in most industries: 1. Globalization of manufacturing . Shift in power structure in the chain 5. Higher level of outsourcing 4. Shorter product life cycles 3. Proliferation in product line 2.

Decision Phases in a Supply Chain Successful supply chain management requires many decisions relating to the flow of information. Supply chain operation . Supply chain strategy or design: 2. The decision falls in three categories: 1. Supply chain planning 3. product & funds.

procurement cycle 2. manufacturing cycle.Cycle view: Customer order cycle.Process views of a Supply Chain There are two ways: 1. Push/pull view: Pull are initiated by customer order & push by anticipation of customer orders . replenishment cycle.

Process View Customer Customer Order Cycle Retailer Replenishment Cycle Distributor Manufacturing Cycle Manufacturer Procurement Cycle Supplier .

 . demand is not known and must be forecast  Pull process is referred to as reactive & push as speculative process.Push vs Pull process Push process .execution is initiated in anticipation of customer orders whereas pull is initiated in response to a customer order  Pull process customer demand is known with certainty whereas in push.

relabeling .  For logistics educators.Logistics Versus Supply Chain Management Four unique perspectives on the relationship between logistics and SCM.unionist . researchers and practitioners  . inter-sectionist  The result of an international survey of logistics / SCM experts are reported.  Four perspectives: traditionalist .

SCM versus Logistics: Four Perspective Traditionalist Logistics SCM Re-Labeling Logistics=SC M Unionist SCM Intersectionist Logistic s SCM Logistics .

SCM as “Logistics outside the firm” & this reduces SCM to a special type of Logistics. external or inter-organisational logistics .TRADITIONALIST LOGISTICS SCM    Traditionalist position SCM within logistics SCM is one small part of logistics.

“Logistics Manager” = “Supply Chain Manager” Supply Chain = Logistics Network Re-labeling narrows the scope of SCM. since SCM equals logistics . what was logistics is now SCM.Re-labeling LOGISTICS= SCM     The relabeling perspective simply renames logistics.

Unionist SCM Logistics This perspective treats logistics as a part of SCM..  .  SCM= purchasing+ logistics+ operations+ marketing+…. SCM completely subsumes logistics.

Customer service . (2001) “all the traditional business functions should be included”          1. Logistics 7. Finance 9. Marketing & Sales 2. Research & development 3. Forecasting 4. Information systems 8. Production 5. Purchasing 6.Mentzer et al.

intermediaries. third party service providers. and all Logistics Management activities.”  .” “Importantly. which can be suppliers. and customers. is also includes coordination and collaboration with channel partners. conversion.According to Council of Logistics management  SCM “encompasses the planning and management of all activities involved in sourcing and procurement.

. operations management purchasing and other functional areas. marketing.Intersectionist SCM Logistics  The intersection concept suggests SCM is not the union of logistics.

integrative elements from all of these disciplines.•SCM is not the union of logistics. For example purchasing area. SCM is strategic. SCM co-ordinates crossfunctional efforts across multiple firms. and in logistics area hiring a third party logistics •At the intersection. operations management. not tactical . marketing. Rather it includes strategic. purchasing and other functional areas.

Total of 98 usable surveys was received..Method of survey          Researchers created lists of topic/technique items. Combining these lists yielded over 120 items. Supply chain management (SCM). Rated from 0 (no importance) to 5 (very high importance) for both Logistics & SCM The 88 Survey Items: Strategic management. response rate R = 98/208 = 4.. Supplier development. Europe.47% Survey recipients were from North America. This list was trimmed to 88 survey items.Information technology. Total sample = 208(logistics educators) were sent via fax All members of the CLM(Council of Logistics Management). .

Inventory management. significantly more important for SCM compared to logistics. Information technology Cycle time reduction. there were no significant differences in importance between logistics and SCM. e-commerce. Logistics management. significantly more important for logistics compared to SCM. (Logistics>SCM)  38 survey items. (SCM>Logistics)  16 items.  the top 10 lists. Supply chain management  . share seven common items: Customer service.Results 34 survey items.

 Supply chain management views supply chain and the organizations in it as a single entity. new product development. Supply chain management acknowledges all of traditional logistics and also includes activities such as marketing.  . maintenance & inventory management.  Logistics focuses its attention on activities such as procurement. distribution. It brings a system approach to understanding and managing different activities needed to coordinate the flow of products and services to best serve the ultimate customer. finance and customer services.Conclusion Logistics typically refers to activities that occur within the boundaries of a single organization and supply chain refers to networks of companies that work together and coordinate their actions to deliver a product to market.