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Supply Chain Management and Logistics

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Title: Supply Chain Management and Logistics


1
Supply Chain Management and Logistics
  • Henry C. Co
  • Technology and Operations Management,
  • California Polytechnic and State University
  • Read Coyle, et al, Supply Chain Management A
    Logistics Perspective, Ch. 1 2

2
  • Five major external forces seem to drive the rate
    of change and shape our economic and political
    landscape
  • globalization
  • technology
  • organizational consolidation
  • the empowered consumer
  • government policy and regulation

Coyle, et al, Supply Chain Management A
Logistics Perspective
3
  • 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-Marts challenges
  • New supply sources

Coyle, et al, Supply Chain Management A
Logistics Perspective
4
  • 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.

Coyle, et al, Supply Chain Management A
Logistics Perspective
5
  • Organizational consolidation
  • 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.

Coyle, et al, Supply Chain Management A
Logistics Perspective
6
  • 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.

Coyle, et al, Supply Chain Management A
Logistics Perspective
7
  • Government policy and regulation
  • 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.

Coyle, et al, Supply Chain Management A
Logistics Perspective
8
What is a Supply Chain?
  • Supply Chain the sequence of organizations -
    their facilities, functions, and activities -
    that are involved in producing and delivering a
    product or service.

Stevenson
9
  • Management of flow of materials, information, and
    funds across the entire supply chain.

Coyle, et al, Supply Chain Management A
Logistics Perspective
10
  • Supply chain management is involved with
    integrating three key flows across the boundaries
    of the companies in a supply chain
  • Product/materials,
  • Information,
  • Financials/cash.
  • Successful integration or coordination of these
    three flows has produced improved efficiency and
    effectiveness for companies.
  • The key factors of successful supply chain
    management include inventory, cost, information,
    customer service, and collaboration
    relationships. Focusing on the management of
    these factors is critical to the implementation
    of a supply chain strategy

Coyle, et al, Supply Chain Management A
Logistics Perspective
11
The 4 Rs
  • Right products
  • Right quantities
  • Right place
  • Right moment
  • at minimal cost.

12
Major Supply Chain Issues
  • Supply Chain Networks
  • The network facilities and supporting
    transportation is important
  • Increased complexity for organizations is a
    problem
  • Inventory Deployments
  • inventory duplication
  • the bullwhip effect
  • Collection and storage of vast amounts of data
  • Cost/Value
  • efficiency (cost) and effectiveness (value)
    prevention of suboptimization
  • Organizational Relationships
  • Tradeoffs and optimization
  • Performance Measurement
  • Why and how

13
  • Technology
  • challenge is to evaluate and successfully
    implement the technology
  • Transportation Management
  • right product, right time, right quantity, right
    quality, right cost, right destination
  • Supply Chain Security
  • concern and potential challenge since 9/11
  • Global Issues
  • Global issues examines how all of the above
    categories are affected when companies operate in
    multiple countries.

14
Development of the Supply Chain Concept
  • Started in the 1960s with the development of the
    physical distribution concept
  • Initial focus on physical distribution or
    outbound logistics was logical since finished
    goods
  • During the 1980s, the logistics or integrated
    logistics management concept developed in a
    growing number of organizations
  • The underlying logic of the systems or total cost
    concept was also the rationale for logistics
    management
  • Supply chain management can be viewed as a
    pipeline or conduit for the efficient and
    effective flow of products/materials, services,
    information, and financials

15
Figure 1-4, p. 17 Coyle, et al, Supply Chain
Management A Logistics Perspective
16
What is Logistics?
  • Logistics was originally a military term used
    to describe the organization of moving, lodging
    and supplying troops and equipment. It was
    clearly somewhat broader in scope than transport,
    since it covered everything needed to deliver
    troops and equipment to the right place, at the
    right time, and in the right condition.

17
Logistics Definitions
  • Inventory
  • Management of materials in motion and at rest
  • Customer
  • Getting the right product, to the right customer,
    in the right quantity, in the right condition, at
    the right place, at the right time, and at the
    right cost (called the dictionary seven Rs of
    logistics)
  • International Society of Logistics
  • The branch of military science having to do with
    procuring, maintaining, utility/ value and
    transporting material, personnel, and facilities
  • Council of Supply Chain Management
  • The art and science of management, engineering,
    and technical activities concerned with
    requirements, design, and supplying and
    maintaining resources to support objectives,
    plans, and operations

18
Logistics Definitions
  • Component support
  • Providing time and place utility/value of
    materials and products in support of Functional
    management organization objectives
  • Common culture
  • That part of the supply chain process that plans,
    implements, and controls the efficient, effective
    flow and storage of goods, services, and related
    information from point of origin to point of
    consumption in order to meet customer
    requirements
  • Supply management for the plant (inbound
    logistics) and distribution
  • Management for the firms customers materials
    requirements, purchasing, transportation,
    inventory management, warehousing, materials
    handling, industrial packaging, facility location
    analysis, distribution, return goods handling,
    information management, customer service, and all
    other activities concerned with supporting the
    internal customer (manufacturing) with materials
    and the external customer (retail stores) with
    product

19
  • Logistics Activities
  • Transportation
  • Warehousing and storage
  • Industrial packaging
  • Materials handling
  • Inventory control
  • Order fulfillment
  • Demand forecasting
  • Production planning/scheduling
  • Procurement
  • Customer service
  • Facility location
  • Return goods handling
  • Parts and service support
  • Salvage and scrap disposal

20
Figure 1-1, p.15 Coyle, et al, Supply Chain
Management A Logistics Perspective
Physical supply Physical distribution material
s management outbound logistics inbound
logistics
21
Integrated Logistics Management
Figure 1-2, p.16 Coyle, et al, Supply Chain
Management A Logistics Perspective
22
Logistics Costs as a of GDP
Logistics Costs as a Percentage of GDP
13 12 11 10 9 8 7 6 5 4 3 2 1 0
12.3
Year
Figure 2-3, p.44 Coyle, et al, Supply Chain
Management A Logistics Perspective
23
Figure 2-5, p.46 Coyle, et al, Supply Chain
Management A Logistics Perspective
24
  • As indicated in Figure 2-3, logistics costs as a
    percentage of GDP have declined from 16 percent
    in 1980, to under 10 percent.
  • In early to mid-1970s, the percentage was close
    to 20. This reflects a serious improvement in
    the efficiency of logistics systems.

25
Inventory to Sales Ratios
  • The Federal Reserve measure of inventory to sales
    ratios from 1991 to 1999 clearly indicate that
    companies are getting better at managing
    inventory.
  • Companies have been supporting larger amounts of
    sales with decreasing amounts of inventory.

26
Transportation/Inventory Cost Trade-off
  • The two largest cost categories in logistics
    systems are transportation and inventory.
  • Motor carriers share of total freight
    expenditures is 450 billion versus 99 billion
    for all other carriers.
  • The most frequent trade-off in logistics is
    between transportation and inventory cost.

27
Learning by Doing Exercises
  • Visit the following web sites and, based on the
    information you find, answer the following
    questions
  • CSCMP
  • What is CSCMP and what is its purpose?
  • What is CSCMP's definition of logistics and how
    does it compare with the text?
  • The American Society of Transportation and
    Logistics
  • What is the Society and what is its purpose?
  • How does it differ from the other groups listed
    in the section?
  • What is their certification program?
  • Discuss how these groups support the growth and
    recognition of logistics as a critical management
    skill.
  • Logistics World
  • Visit this web site and describe its purpose.
  • Explore at least three of the links and explain
    how this web site might assist you.
  • Supply Chain Management Review
  • Click on the career tab, and find 3 job listing
    that interest you.
  • Supply Chain Council
  • What is SCOR and what is its purpose?
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