3 Operations, Logistics and Supply Chain Management … 33

as much as possible the needs of both the European-Asian and the Intra-Asian
network.
In the 18th century businesses gradually turned downwards. The Dutch lost
their position as a maritime power mostly to England; after the fourth English-
Dutch war retourships were even no longer able to reach the Republic. At the
end of that century, only trading posts at Decima, in Kanton and in Java were
still in the hands of the Dutch. In 1799 the closure of the VOC was definitive.

3.3 Definitions

There exist several definitions for supply chains, logistics and their constituting
operations. For this textbook, we follow the definitions provided by the American
Council for Supply Chain Management Professionals (CSCMP), albeit the wording
has been slightly adapted to include reverse flows and to emphasize the distributed
nature of modern supply chains.
A supply chain encompasses all activities (operations) needed to convert raw
materials into final products, from sourcing through component manufacturing and
final assembly to distribution to end-markets, and including all necessary materials
handling and storage (in short, logistics) activities. More and more, it also includes the
handling of return flows of products and possible re-use of materials and components,
in which case we speak of closed loop supply chains. Almost always, these activities
are not executed by only one industry but instead encompass a number of companies
and organizations jointly operating in a chain or network, referred to as end-to-end
supply chains.
Logistics refers to the transportation and storage of materials, parts and prod-
ucts in a supply chain. Logistics includes inbound and outbound processes to and
from warehouses, as well as internal and external materials handling and transport
operations. It also includes the execution of services and the transfer of information
between the various stages of a supply chain.
Once these core topics have been defined, one might easily state that Supply
Chain Management and Logistics Management is the management of supply chains
and logistics, respectively. Although clearly true, some further clarification may be
helpful. Therefore, we have chosen to provide separate definitions.
Supply chain management encompasses the planning and management of all sup-
ply chain operations. Importantly, it also includes the coordination and collaboration
with channel partners, which can be suppliers, intermediaries, third party service
providers, and customers. In essence, supply chain management integrates supply
and demand management within and across companies.
Logistics management is that part of supply chain management that plans, imple-
ments, and controls the efficient, effective forward and reverse flow and storage of
34 H. Zijm et al.

Fig. 3.1 Hierarchy of

supply chains, logistics and Global Supply
transportation Chain Management

Logistics Management

Transport Operations

goods, services and related information between the point of origin and the point of
consumption in order to meet customers’ requirements. It typically includes inbound
and outbound transportation management, fleet management, warehousing, materials
handling, order fulfillment, logistics network design, inventory management, sup-
ply/demand planning, and management of third party logistics services providers.
A proper execution of logistic operations depends on, and has impact on, sourcing
and procurement, production planning and scheduling, packaging and assembly, and
customer service. Logistics management is an integrating function, strongly rely-
ing on an adequate information infrastructure, and ideally synchronized with other
functions including marketing, sales, manufacturing and finance. Unfortunately, in
many popular magazines and in the eyes of the public, logistics is often still seen as
synonymous with transport. The above definitions clearly indicate the much wider
scope of logistics but to avoid any ambiguity, Fig. 3.1 once more relates Supply
Chain Management, Logistics Management and Transport Operations to each other.

3.4 Key Aspects of Supply Chains and Logistics

The definitions presented above deserve some further discussion to put them in
perspective, even more so when they are projected on current societal needs and
concerns. Below, we elaborate on these definitions by discussing seven key aspects.
Availability of materials, products and information
This is the basic notion from which the term “supply chain” stems. Its primary
objective is to ensure the timely availability of the right quantities of raw materials,
parts and products together with all information needed for further processing at their
destined locations. Functions in a supply chain that are instrumental in achieving
this goal are sourcing and procurement, transport and logistics, manufacturing and
assembly, stock keeping between subsequent phases, and sales. With each step, data
on preceding steps and product characteristics is used, and information for subsequent