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Module 01 : Understanding Logistics and Supply Chain

Supply Chain Management and Warehousing
24th September, 2007

BM Campus

Balaram Swamy

Evolution, Confusions, Jargon and Definitions

Understanding Logistics and Supply Chain Logistics : from Greek word “Logisticos” – The science of
computing and calculating 1905
Major Chauncey B Baker … That branch of the art of war pertaining to the movement and supply of armies is called Logistics

Agrawal and Rahul Atlekar, Web

Reference 6~8; 4, Pg 14~15 & 19~20, 2, Pg

Balaram Swamy

Definition that we will use …

Understanding Logistics and Supply Chain
Material Money Information Supplier Customer

• • •

Definition : Bi-directional flow of Material, Money and Informationare an answer to Xth Why? Ref to “B-school Definitions learning to living the life” look at a definition in a context, it Stated otherwise, do not will limit understanding First, understanding-and-feeling and then, knowing it, is defining knowing it through it’s context(s) … i.e. knowing it Next is, more fully … the contexts in which we will understand Following is Logistics and Supply Chain role in the Strategic Thinking of the Various Components and their
Company the Network viz. Warehouse Location and Transport Designing Various Processes, Infrastructure, Manpower and Information Needs Managing a Logistics and Supply Chain Infrastructure

Reference Pg 5~12 1,

Balaram Swamy

Understanding Logistics and Supply Chain Situational Contexts
Workplace Logistics within a single workstation, viz. stocking and replenishing the display-rack stock or promo-zone stock in a store, ergonomics in a assembly line Facility Logistics between workstations, viz. material handling inside a facility e.g. warehouse to floor of store, floor of the store to cash counter and to the exist, exit to the car park Corporate Logistics between the facilities of a company or that of the company and it’s supplier(s) or customer(s) or that of suppliers’ suppliers or customers’ customers Global Logistics same as Corporate Logistics but includes between countries; globalisation and increased use of web sites for buying and selling has increased the incidence of this complex activity viz. multiple handing-over, players, languages, documents, currencies, time zones Supply Chain Logistics and cultures of a international business Inter and intra workstation, facility and corporate logistics

Situational Contexts

Reference Pg 6~8 1,

Balaram Swamy

Understanding Logistics and Supply Chain vs. Supply Chain Logistics
Confusion between Supply Chain and Logistics
Supply Chain is …

Facilities : Factories, Warehouses, Rail & Air Terminals, Ports, Stores and Homes Transport : Trucks, Trains, Plaines and Ships Information System : Source Documents and information on the real time status of the document, material, facilities and transport Activities that take place in the Supply Chain Components, as given above and between them Activity Components of Supply Chain are – Customer Satisfaction, Inventory Management, Supply, Transportation and Warehousing; 5Point Analysis of Logistics

Logistics are …

Supply Chain vs. Logistics - Comparison

Supply Chan as facilities and logistics as activities with window 2007

Reference Pg 8 1,

Balaram Swamy

Understanding Logistics and Supply Chain LSC Activities 5-Point Activities
CRP

Customer Response Policy Inventory Planning and Management

WMS

IP&M Logistics and Supply Chain

Supplier Service Policy Physical Distribution System

PDS

SSP

5-Point Interdependent Activities

Warehouse Management and Systems

Reference Pg 12~15 1,

Balaram Swamy

Understanding Logistics and Supply Chain LSC Activities : Framework 5-Point Activities
Logistics and Supply Chain
Goals, Measures and Performance Parametrs Process Design Information System Requirements Organisation Development

Common to all 5-Point Activities

Customer Response

Inventory Planning and Managemen t

Supply

Transportation

Warehousing

5-Point Interdependent Activities
Balaram Swamy

Reference Pg 16 1,

Systematic Analysis of 5-Point Activities

Understanding Logistics and Supply Chain LSC Activity : Analysis Framework
Investigate Investigate
Profile Measure Benchmark

Innovate
Simplify Optimise Use Best Practice

Implement Innovate Implement
Systemize Automate Humanize

Each LSC Activity need be analysed using this tool Balaram Swamy

Reference Pg 18~19 1,

Understanding Logistics and Perf Chain SupplyPara 6
Example of Gap Analysis
WMS 4.0 3.0 PDS 5.0 3.5 54.0 43.5 3 2 1 0 3.5 5.0 SSL 3.8 IP&M 5.5 Actual
Perf. Para Actual Best Practices 3.5 4.0 Proces 3.0 4.0 Info Sys 3.0 4.0 Org Dev 3.5 5.0

Process 4.0 3.0 3.0 4.0 Info Sys

3.5 3.2 4.0 CSL Best Practices
CSL 3.2 4.0 IP&M 3.8 5.5 SSL 3.5 5.0 PDS 3.5 5.0 WMS 3.0 4.0

5.0 Dev Org

Reference Pg 19 1,

Balaram Swamy

Assignment - 01
1. Guidelines for using Case Studies in Supply Chain Management is given for classroom discussion and/or presented in the classroom

Supply Chain Management and Warehousing

• Following Cases are given for presentation and discussion on 24th September, 2007 Manufacturer Gateway : A direct Sales
Thunderbolts Manufacturing and Retail Zara : Apparel W W Grainger and McMaster-Carr : MRO Suppliers Toyota : A Global auto manufacturer Amazon. COM : An e-business Pinnacle Achievers Vikings Saptarishi

1. In addition to participating in the above case, the following students will present an additional case; New Global Links in Auto Supply Chain Namita Bhuyan Namita Bhuyan
Dharmendra Kumar XXXXXXXXX XXXXXXXXXXX XXXXXXXXXXX Dharmendra Kumar XXXXXXXXX

TXXXXXXXXXXXXXXXX TXXXXXXXXXXXXXXXX

Reference PGPRM; 2006~08 Batch

Balaram Swamy

References
Supply Chain Management and Warehousing
1. Frazelle, Edward ; Supply Chain Strategy; 2004 edition; Tata McGraw-Hill Pub. Co. Ltd. 1. Agrawal, D K; Textbook of Logistics and Supply Chain Management; 2003 edition; Macmillan India Ltd. • Chopra Sunil and Meindl Peter; Supply Chain Management – Strategy, Planning and Operation; 3rd edition; Prentice Hall of India Pvt. Ltd. 1. Mohanty R P and Deshmukh S G; Supply Chain Management – Theories and Practices; 2005 edition; Biztantra 1. Rahul Atlekar Mohanty R P and Deshmukh S G; Supply Chain Management – Theories and Practices; 2005 edition; Biztantra 1. Sople Rahul Atlekar Mohanty R P and Deshmukh S G; Supply Chain Management – Theories and Practices; 2005 edition; Biztantra 1. Kaminski Sople Rahul Atlekar Mohanty R P and Deshmukh S G; Supply Chain Management – Theories and Practices; 2005 edition; Biztantra

Reference PGPRM; 2006~08 Batch

Balaram Swamy

Prepared for Classroom Discussions by
Prof. Balaram Swamy J
B. Tech (IIT, Kharagpur) and PGDM (IIM Calcutta, Joka)

Asian School Management City Office :

of

Business

# 8, Sai Anandam Complex, Patia Square, Bhubaneswar : 751 024 Phone : 91 674 274 4881, 4882, 3154 Fax : 91 674 274 4883

Campus

:

Shiksha Vihar, Baranga-Khurda Road, Chandaka, Bhubaneswar : 754 005 Phone : 91 674 211 1204, 1207, 1208 Fax : 91 674 211 1205, 1206

e-mail Website

: balaramswamyj@yahoo.com and : www.asbm.ac.in balaram@asbm.ac.in Mobile : 91 99380 68979

Reference PGPRM; 2006~08 Batch

Thank You
24th September, 2007

BM Campus

Balaram Swamy

Supply Chain Management and Warehousing
Module 02 : Customer Response
24th September, 2007

BM Campus

Customer Response
75% of the reasons that customers leave a company has nothing to do with the product 98% of dissatisfied customers do not complain, they just leave

Hidden Cost and it’s Importance

85% of dissatisfied customers tell 9 people; 13% tell 20 people; a satisfied customer tell 5 of your customers will leave, 65% due to In the next 6 years, 80% something you did Therefore, Customer Response Strategy is very important … it helps in arriving at an … • agreement between logistics organisation and it’s External and

Internal Customer agreement on the Customer Service Policy at a Total Logistics Cost
External Environment Busin ess Strat egy Internal Analysis Internal Customer External Customer Custo mer Resp onse Strat egy Custo mer Respo nse Policy

Reference 1, Pg 70~71, Fortune One World Distribution

Balaram Swamy

Customer Response
Understanding Customer Service

A Wider Perspective

In Retail Strategy, we appreciated that the “Customer Service” is one of the major components which classifies the Retail Business in various Retail Formats We appreciated that, the cost of “Customer Service” is a part of “Value Pack Offering” to the customer in the Retail Business We also understood that, Merchandise – both Variety and Assortment, are integral part of the “Value Pack” and appreciated that, the cost is factored into the Price “Customer Service” arising out of Service-to-the-Customer (during and post-purchase), Merchandise (Inventory Management) and, Inbound-Outbound Logistics (Porter’s Generic Value Chain Analysis for SCA)

Here, we will understanding Customer Service as given are the subject of LSC Domain below: Various Feature and Components of Customer Service
Customer Service Measures – the Gap Analysis

Reference Pg xx x,

Balaram Swamy

Customer Response
Understanding to Defining “Customer Service”

Definition and Features

Features of Customer Service

A strategic process of Cost-Efficient, Value-Added Benefit provided to External Customers so as to exploit this in Sales and Marketing Process A Strategic Process to provide Value-Added Services to the Customers Always ensures a Trade-off between Cost and Service Keeps the Customer always, Happy and Loyal Brings in Harmonious Relationships between Supply Chain Members Starts, generally with Order Entry and ends with Delivery of Goods to the Customer Brings in Competitive Advantage Reflects Corporate Vision

More often, this has become a source of Sustained Competitive Advantage for some of the successful companies Balaram Swamy Reference83 : Pg 80, Ashok Leyland Caselet 2, Pg

Customer Response Customer Service Policy
A Mature Customer Service Policy - CSP Statement of CSP

CSP is stated, Quantified and Segmented by Customer and Item Categories Refer to the Caselet : 2, Pg 99; The Financial Express, 2nd August 1999 J K Tyres Treads a New Measure for Winning Dealer Loyalty The Company is sharing its Sales Policy
for 1999~2000 with its Dealers in writing

CSP is in measurable Quantified terms and are Segmented by Customer-Item Cat - by Customer Sales Activity Profile (SAP-C)
Sales Activity Profile - by Item Sales Activity Profile - by Customer-Item (SAP-I) (SAP-CI)
Investigate
Profile Measure Benchmark Simplify Optimise Use Best Practice

Watch the use of Investigate-InnovateImplement framework in the following two slides Investigate

Innovate

Implement
Systemize Automate Humanize

Innovate

Reference 78~xx ; 2, Pg 87 1, Pg

Impleme nt

Balaram Swamy

Customer Activity Profiling
Sales Activity Profile – by Customer (SAP-C)
ABC Category of Customers by Sales or Profits Typically 5% of customers normally account for 80% of sales or profit; 15% of customers for 15% and, balance 80% of customers account for 5% of sales or profit This helps in making differentiated customer policy, each serving to a segment of customers; hence, cost differentiation and justification is possible

SAP-C

Reference Pg 73~76 1,

Balaram Swamy

Customer Activity Profiling
Sales Activity Profile – by Item (SAP-I)
ABC Category of Items by Sales or Profits Typically 5% of items normally account for 80% of sales or profit; 15% of items for 15% and, balance 80% of items account for 5% of sales or profit This is similar to ABC-VED Matrix, in Inventory Management where different Service Levels viz. 95% Service Level means going o/f stock for 5% of times when it is needed This system of analysis helps to make a Differentiated Customer Policy and derive maximum cost-benefit Refer to Fig 4.4, 1, Pg 76 : % Sales-Profit across Customer and Items Categories On Item axis, further subdivision over SKUs and, on Customer axis, Store Location wise data from Data-Warehouse helps fix a Customer Service Standard which is optimal

SAP-I and SAP-CI

Sales Activity Profile – by Customer and Item (SAP-CI)

Reference Pg 73~76 1,

Balaram Swamy

Customer Response Using the Frameworks
We will begin with Investigate, Innovate and Implement route …
Investigate Investigate
Profile Measure Benchmark Simplify Optimise Use Best Practice

Innovate

Implement Innovate Implement
Systemize Automate Humanize

and, plan Customer Response (CR) Activities as per Logistics Activity Framework
Logistics and Supply Chain
Goals, Measures and Performance Parametrs Process Design Information System Requirements Organisation Development

Common to all 5-Point Activities

Reference Pg 16 & 18 1,

Balaram Swamy