OPERATIONS RESULTS IN OUTPUT

INPUTS OPERATIONS OUTPUTS

•People •Manufacture •Goods

•Buildings •Serve •Services
•Raw materials •Supply •Profits
•Equipments •Transport •Waste
•Information •Sell •Wages
•Investment •Train •Etc.
•Etc. •Etc.
 DEMAND AND SUPPLY CYCLE
CUSTOMERS CREATE
PASSED TO

SUPPLY OF DEMAND FOR

PRODUCTS PRODUCTS

ARRANGE PASSED TO

OPERATIONS

OTHER OTHER
OUTPUTS INPUTS
 ROLE OF LOGISTICS
Operations within the
External supplier organization External customer

Internal Internal
supplier customer

Materials
Management

Outbound
Inbound
Logistics
Logistics
Logistics
 LOGISTICS
• Logistics is the function responsible for the flow
of materials from suppliers into an organization,
through operations within the organization, and
then out to customers.
• The supply system includes the process of
planning, implementing, and controlling the
efficient, effective flow and storage of goods and
services from the organization from its place of
production to the place where it is required. This
supply system is referred as ‘Logistics
Management’.
 MATERIALS
• Materials are all the things that an
organization moves to create its products.
These materials can be tangible (such as
raw materials) and intangible (such as
information).
 SUPPLY CHAIN FOR PAPER
Planted Felled by
Grown by by
gardener forester logger
Seedling Young Tree Mature Tree Logs

Chipped
Finishing
Processed Processed
Small roll of
Large roll of paper Raw Paper Wood Pulp
Finished paper

Cutting

Transport Transport Transport

Sheets of paper Packer Wholesaler Retailer

Purchase
Final Customer
EXAMPLE OF SUPPLY CHAIN
Supplier Customer

Manufacturer Wholesaler Retailer

Supplier Customer
 PROCESS OF SUPPLY CHAIN
INTEGRATION
Enterprise Systems

Deliver Source Make Deliver Source Make Deliver Source Make Deliver Source

Sub- Supplier Enterprise Customer Sub-

supplier customer
 SUPPLY CHAIN OF MILK
Supplier Customer

TANKER
MILK FARM DAIRY
COLLECTION

Supplier Customer

Supplier Customer
Customer supplier

SUPER BOTTLING
DISTRIBUTER
MARKET PLANT

Customer
Customer Customer
Supplier Supplier
SUPPLY CHAIN MANAGEMENT -
DEFINITION
• A supply chain consists of activities and organizations
that materials move through on their journey from initial
suppliers to final customers.
• As goods and services flow from supplier to producer to
customer to final user, supply chain management is
concerned with the interfaces between organizations.
• SCM is the management of linkages between
organizations.
• SCM is a network of the manufacturer’s suppliers, and
supplier’s suppliers on the one hand and customers and
customer’s customers on the other hand. This network
exists to ensure a free and smooth flow of information,
goods, services and profits among all its participants.
OBJECTIVES OF SUPPLY CHAIN
• To reduce the physical supply chain links;
• To define supply chain responsibilities to a
core service competency
• To decrease the time and cost of getting
end user customer products in required
quantity at the place of requirements.
 ACTIVITIES IN A SUPPLY CHAIN

Upstream activities

Initial 3rd tier 2nd tier 1st tier

Supplier Supplier Supplier Supplier

Organization

Final 3rd tierl 2nd tierl 1st tier

customer customer customer customer

Downstream activities
SUPPLY CHAIN AROUND A
MANUFACTURER
3rd tier 2nd tier 1st tier
Supplier Supplier Supplier
Sub-
Material Component
assembly
Supplier Supplier
Supplier

Manufacture

3rd tierl 2nd tierl 1st tier

customer customer customer
End Retailers Wholesalers
users
 SUPPLY CHAIN STAGES

Wholesaler
Supplier Manufacturer Retailer Customer
/ Distributor

Wholesaler
Supplier Manufacturer Retailer Customer
/ Distributor

Wholesaler
Supplier Manufacturer Retailer Customer
/ Distributer
 MOVEMENT WITHOUT A
WHOLESALER
Factories

24 routes

customers
 MOVEMENT WITH A
WHOLESALER
Factories

3 routes inwards

WHOLESALER

8 routes outwards

customers

Using intermediaries simplifies the supply cahin

 BENEFITS OF WELL DESIGNED
SUPPLY CHAIN -1
• Best location of operations, regardless of the
location of customers.
• Concentrating operations in large facilities,
benefits of economies of scale obtained.
• Producers do not keep large stocks of finished
goods, as the same are kept down the supply
chain nearer to customers.
• Higher price discouts to wholesalers due to large
order size.
 BENEFITS OF WELL DESIGNED
SUPPLY CHAIN - 2
• Wholesaler keeps stocks of many suppliers, giving
retailers a choice of goods.
• Wholesalers are near to retailers and have short lead
time.
• Retailers carry less stocks as wholesalers provide
reliable deliveries.
• Retailers can have small operations, giving a responsive
service near to customers.
• Transport is simpler with fewer, larger deliveries thus
reducing costs.
• Organization can develop expertise in specific types of
operations.
ACTIVITIES OF LOGISTICS
Procurement / Inward
purchasing Receiving Warehousing
transport

Stock control Order picking Materials handling

Recycling,
Outward Physical returns, and
transport distribution of waste disposal
finished goods

Locations communication