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Logistics and Supply chain Management

Dr. A.Shakuntala

Logistics and Supply chain Management
• Logistics is defined as the process of anticipating customer needs and wants, acquiring the capital, materials, people, technologies and information necessary to meet those needs.

Logistics and Supply chain Management
• Logistics management is the process of planning, implementing and controlling the efficient, effective flow and storage of goods, services and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.

Logistics and Supply chain Management
• Logistics Management includes the design and administration of system to control the flow of materials, work-in-process, and finished inventory to support business unit strategy.

work-in-process and finished goods. • It has the ability to meet the customer expectations and requirements of goods.Logistics and Supply chain Management Major features of Logistics Management: • It ensures a smooth flow of all goods such as raw materials. • It ensure the delivery of quality product. .

• It deals with movement and storage of goods in appropriate quantity.Logistics and Supply chain Management • It offers the best possible customer service at the least possible cost. • It is an integration of various managerial functions for optimization of resources. • It enhances productivity and profitability. .

Logistics and Supply chain Management Components of Logistics Management: • Generic component -Customer service .Corporate vision .Service expectations .

Logistics and Supply chain Management Primary components: • Network design • Transportation • Inventory management • Order processing .

Logistics and Supply chain Management Supportive components: • Storage and warehousing • Materials handling • Protective packaging • Procurement • Information • Forecasting .

Logistics and Supply chain Management Logistics Functions: • Procurement function • Production function • Physical distribution .

Inputs need Sources study Quality Negotiations and supply contracts Order placement Shipment • • • • • • . parts and components of specified quality and quantity from quality certified suppliers to the production centers.Logistics and Supply chain Management Procurement Function: ensures a smooth flow of raw materials.

Inputs Production schedule Inventory management Storage Packaging Material handling • • • • • • .Logistics and Supply chain Management Production Function : deals with efficient and effective management of work-in-process inventory and its flow between the different stages of manufacturing.

Output inventory Protective packaging Customer Order processing Distribution warehousing Transport • • • • • • .Logistics and Supply chain Management Physical Distribution Function: refers to the movement of finished goods from the last point of production to customers or end users.

Logistics and Supply chain Management Integrated Logistics System: • To ensure better customer service by appropriate value addition for superior customer values • To ensure higher productivity • To avoid a repetition of similar types of logistical functions by different departments at different levels • To properly monitor the performance of existing logistics system so that a continuous improvement in the system can be made possible in time. .

starting with raw materials and ending with finished products delivered to the ultimate consumer. .Logistics and Supply chain Management • Supply chain refers to the way that materials flow through different organisations.

Logistics and Supply chain Management • • • • • • Supply chain may involve the following stages: Customers Retailers Wholesalers/distributors Manufacturers Component/raw material supplier .

Logistics and Supply chain Management Decision Phases in a Supply Chain: • Supply chain strategy or design • Supply chain planning • Supply chain operation .

Logistics Positioning • Logistics Positioning is concerned with alternative ways that logistics can be deployed as a core competency of a firm. .

Time based logistics 4. Logistics environment assessment 3.Logistics Positioning The various topics relevant to logistics positioning are: 1. Alternative logistics strategies 5. Logistics time-based control techniques. Strategic integration and 6. Logistics reengineering 2. .

. • Its basic idea is to identify and study the steps required to perform specific work so as to increase the possibility of integrating performance.Logistics Reengineering • It provides a framework for implementing system integration principles.

. • System Integration – The logic of systems analysis forms the foundation for logistics reengineering.Logistics Reengineering All Logistics Reengineering initiatives have four common factors.

• Quality initiatives . • Activity Based Costing – it is critical to develop meaningful metrics to measure existing practice and evaluate the relative attractiveness of alternatives.Logistics Reengineering • Benchmarking – consists of a systematic procedure for identifying the best practice and modifying actual knowledge to achieve superior performance.

Target identification 2. Implementation . Evaluation 6. Detailing and developing metrics 3.Logistics Reengineering • The standard six-step procedure to guide a firm’s reengineering initiative: 1. External benchmarking 5. Internal analysis 4.

.Logistics Environmental Assessment • The purpose of considering environmental impact. • A range of forces external to the enterprise limit the flexibility of logistical operations. when formulating logistical strategy is to assess the varied direction and the rate of change related to planned logistical operations.

Logistics Environmental Assessment • The type of environmental factors that should be considered are: 1. Energy 4. Interest rates 3. Inflation 2. Households 6. Population 5. Productivity . Transportation regulations 7.

Logistics Environmental Assessment • These forces include 1. Material-energy assessment 5. Industry. Technology assessment 4. Geo market differentials 3. Channel structure .competitive assessment 2.

. Economic-social projections 7. Service industry trends and 8. Regulatory posture.Logistics Environmental Assessment 6.

locating and selecting suppliers negotiating terms and follow up to ensure supplier performance.SOURCING Sourcing Decisions in Supply Chain Management: • Sourcing decisions are high level. • Purchasing includes all those activities associated with identifying needs . strategic decisions regarding what products or services to provide internally and what products to obtain from external supply chain partners. .

The sourcing decision is also called as “make-or-buy decision”.SOURCING DECISIONS • Sourcing decisions that address which products and services will be provided using resources within the firm (known as insourcing) and which will be provided by a firm’s supply chain partners (known as outsourcing). .

. products.SOURCING DECISIONS • Purchasing or procurement is the process by which firms acquire raw materials. services or other resources from suppliers to execute their operations. sourcing refers to the entire set of business processes required to purchase goods and services. components.

Insourcing • • • • Advantages: High degree of control Ability to oversee the entire process Economies of scale and/or economies of scope. .

.Insourcing • • • • Disadvantages: Reduced strategic flexibility High capital investment Loss of access to superior products/services offered by potential suppliers.

Outsourcing • • • • • Advantages: High strategic flexibility Low investment risk Improved cash flow Access to state-of-the-art products services .

Outsourcing • Disadvantages: • Possibility of choosing a bad supplier • Loss of control over the process and core technologies • Communication and coordination may be difficult .

Key Sourcing Related Process • • • • • Supplier scoring and assessment Supplier selection Design collaboration Procurement Sourcing planning and analysis .

single sourcing • 2.Sourcing Strategies • Once the decision has been made to outsource a product or service. the buying firm has to choose between • 1. multiple sourcing .

Sourcing Strategies • In single sourcing. the buying firm depends on a single supplier for all or nearly all of a particular item or service. the buying firm shares its business across multiple suppliers for the same item or service. . • In multiple sourcing.

Guidelines for Sourcing • • • • • • • Product lifecycle duration Product variations Labour content Intellectual property content Transportation cost Product value Security .

TRANSPORTATION • Transportation refers to the movement of products from one location to another. • Transportation cost is a significant component of the total costs incurred by most supply chain. . from the beginning of a supply chain to the final customer.

TRANSPORTATION The selection mode of transportation or service offering within a mode of transportation depends on a variety of service characteristics such as Freight rates Reliability Transit time Loss. damage. claims processing and tracing • • • • .

TRANSPORTATION • Shipper market considerations and • Carrier considerations .

TRANSPORTATION The Role of Transportation in Logistics: • The movement of materials from one place to another adds value to materials which is referred to as place utility. • Time utility is created by warehousing and storing materials and finished goods until they are needed. .

This is known as time-intransit and consistency of service. .TRANSPORTATION • Transportation determines how fast and how consistently a product or material moves from one place to another.

Characteristics of Transportation Characteristics of Transportation Modes and Selection: • The choice of transportation mode depends on the : • Nature of goods • Access to carriers • Price • Speed or transit time • Security of goods • Government regulations • Safety and fit with integrated logistics strategy. .

Carrier Characteristics and Selection • The general criteria for carrier selection are discussed below: • Price • Accessibility • Responsiveness • Claims Record • Reliability .

Revenue Management • “The use of pricing to increase the profit generated from a limited supply of supply chain assets is known as revenue management. Capacity and 2. Inventory .” • Two forms of supply chain assets are: 1.

The value of the product varies in different market segments.Revenue Management Firms use targeted differential pricing to be successful in revenue management. The product is highly perishable or product wastage occurs. Demand has seasonal and other peaks The product is sold both un bulk and on the spot market. • • • • .

Evaluating the Firm’s Market Carefully 2. Applying optimisation to obtain the Revenue Management Decision . Implementing a Forecasting Process 4. Quantifying the Benefits of Revenue Management 3.Revenue Management Using Pricing and Revenue Management in Practice: 1.

Revenue Management 5. Understanding and Informing the Customer 7. . Involving both sales and operations in Revenue Management 6. Integrating Supply Planning with Revenue Management.