Unit 6: Logistics and Supply Chain Management

Learning Objectives

▪ Define what Logistics and Logistics Management is

▪ Identify types of Logistics ( Inbound, Outbound and
Reverse Logistics)
▪ Discuss what supply chain is and how supply chain
management works.
 Logistics
Definition
Logistics 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 the point of consumption for
the purpose of conforming to
customer requirements”
 Logistics tu hoc

Characteristics
▪ Logistics is a component of supply chain
▪ The work required to move and position inventory
throughout a supply chain
▪ A subset of and occurs within the broader
framework of a supply chain
 Logistics
Characteristics
▪ Logistics is the primary conduit of product and
service flow within a supply chain arrangement
▪ Firm engages in a supply chain is involved in
performing logistics
▪ Logistical integration is the main focus and desire
for organizations to achieve competitive advantage
 Logistics
Characteristics
▪ The five major logistics activities:
• Customer service
• Demand forecasting/planning
• Inventory management
• Logistics communications
• Material handling
Logistics

Roles of Logistics
(1) Roles of Logistics in the Economy
(2) Roles of Logistics in a firm
Roles of Logistics
(1) The Role of Logistics in the Economy
▪ Logistics plays a key role in the economy in two
significant ways:
• (1) Logistics is one of the major expenditures for
businesses, thereby affecting and being
affected by other economic activities
• (2) Logistics supports the movement and flow
of many economic transaction; it is an
important activity in facilitating the sale of
virtually all goods and services
 Roles of Logistics ko can hok

(2) Roles of Logistics in a firm

▪ Effective logistics management has been recognized as a key opportunity
to improve both the profitability and competitive performance of a firm
▪ Logistics supports marketing. It plays a key role in three critical elements
of the marketing concept
• Customer satisfaction
• Integrated effort/systems approach
• Adequate corporate profit
▪ Creates value by timing and positioning inventory – combination of a
firm’s order management, inventory, transportation, warehousing,
materials handling, and packaging
▪ Integrated logistics serves to link and synchronize overall supply chain
connectivity. Not only maximize but optimize, best fit.
 Types of Logistics
important

▪(1) Inbound logistics

▪(2) Outbound logistics
▪(3) Reverse logistics
 Types of Logistics
(1) Inbound logistics
▪ Inbound logistics is concerned with activities related
to the incoming flow of resources needed to make a
product or a service
▪ Inbound logistics processes may include managing
suppliers, costs, inventory, and transportation to
ensure the right components or subassemblies
arrive in a firm on time
 Types of Logistics
(2) Outbound logistics
▪ Outbound Logistics is the process related to the storage
and movement of the final product and the related
information flows from the end of the production line to
the end user.
▪ Outbound logistics refers to activities in delivering the
right product at the right time to customers at a
minimum cost
▪ Customer satisfaction is the primary objective of
outbound logistics
Inbound Logistics Vs Outbound Logistics
 Types of Logistics
(2) Reverse logistics
▪ Reverse logistics is the process of moving products
from end-user back to the origin to recover value or
proper disposal
▪ The value is recaptured from products recovered
from customers through rework, refurbishment,
reuse, scrap recycling, or government incentives for
recyclable products
Reverse Logistics
The 5 “rights” of logistics

Right Product

Right Place

Right Time

Right Condition

Right Cost
Logistics management
Logistics management: part of supply chain
management which plans, implements, and controls
the efficient flow and storage of goods, services and
related information between the point of origin and
the point of consumption in order to meet customers’
requirements.
Components of logistics management
Supply chain
Definition
▪ Supply chain is defined as “the integration of activities along
the supply chain linking customer orders, distribution orders,
inventory ordering, placement of manufacturing orders,
cash flows and ultimately supplier orders”
▪ A supply chain consists of the flow of products and services
from
✓ Raw materials manufacturers
✓ Component and intermediate manufacturers
✓ Final product manufacturers
✓ Wholesalers and distributors and
✓ Retailers
Supply chain
tu hoc

Characteristics
▪ A supply chain consists all parties involved, directly
or indirectly, in fulfilling a customer request. The
supply chain includes not only the manufactures
and suppliers, but also transporters, warehouses,
retailers, and even customers themselves” (Chopra
&Meindl, 2010)
▪ A supply chain involves the constant flow of
information, product, and cash between different
stages.
Characteristics of Supply chain
 1. demand forecasting

Supply chain
2. sourcing
3. procurement
4. meterials handling
5. order processing
6. manufacturing
7. transportation
8. logistics
9. warehousing

Scope
10. inventory managment
11. customer service

▪The scope of supply chain is extremely broad,

involving multiple firms performing business
functions.
▪These functions include not only logistics,
transportation, and warehousing, but also sourcing
and procurement, manufacturing, materials handling,
forecasting, order processing, inventory management,
and customer service.
Scope of Supply chain
 tu doc

Supply chain
A simple supply chain links a company that manufactures or
assembles a product with its suppliers and distributors and
customers. It should be noted that every supply chain starts
and ends with the customer.
A typical supply chain is made up of a number of elements that
are connected by the movement of goods along it.
✓ Customer
✓ Planning
✓ Purchasing
✓ Inventory
✓ Production
✓ Transportation
Customer
✓ The supply chain begins with the customers and their
need for a particular product.
✓ The customer contacts the Sales Department of the
company, which enters the sales order for a specific
quantity to be delivered on a specific date.
✓ The sales order includes specific requirements that have
to be fulfilled by the production facility.
Planning

The requirements activated by the customer’s sales

order are combined with other orders.
The Planning Department creates a production plan
to make the products to complete the customer’s
orders.
To manufacture the products the company has to
purchase some raw materials.
Purchasing
The Purchasing Department receives a list of raw
materials and services required by the Production
Department to fulfil the customer’s orders.
The Purchasing Department sends purchase orders to
selected suppliers asking for the necessary raw
materials to be delivered to the manufacturing site.
Inventory

The raw materials are received from the

suppliers.
Then they are checked for quality and accuracy
and moved into the warehouse.
The supplier will then send an invoice to the
company for the delivered items.
Production

The finished products ordered by the customer are

manufactured using the raw materials purchased from
suppliers.
The items are tested and then they are stored in the
warehouse prior to delivery to the customer.
Transportation

The Shipping Department determines the most

efficient method to ship the products to the customer
so that they are delivered on time.
When the goods are received by the customer, the
company will send an invoice for the delivered
products.
Supply chain Management
The planning and management of all activities involved in sourcing
and procurement, conversion, and all logistics management activities
…also includes coordination with channel partners, which can be
suppliers, intermediaries, third party service providers, and
customers.
Council of Supply Chain Management Professionals

The design and management of seamless, value-added processes across

organizational boundaries to meet the real needs of the end customer.
Institute for Supply Management
The design, planning, execution, control and monitoring of supply
chain activities with the objective of creating net value, building a
competitive infrastructure, leveraging worldwide logistics,
synchronizing supply with demand, and measuring performance
globally.
Association forOperations Management
Supply chain Management

▪ SCM is an initiative focuses managing the entire

process as products are transformed from raw
materials into finished goods delivered to the
ultimate customer.
▪ Supply chain management is primarily concerned
with three flows:
• Product/service
• Information
• Money
 Components of SCM
The five basic components of SCM include:
✓ Plan
✓ Source
✓ Make
✓ Deliver
✓ Return
Plan

Logistics Companies must create a strategy for

managing their resources in order to meet customer
demand for their product or service.
SCM planning includes developing a set of metrics to
monitor the supply chain so that
a) it is efficient, cost-effective;
b) it delivers high quality and value to customers.
 Source
Logistics companies must choose suppliers to deliver
the goods and services they need for creating their
product.
Therefore, supply chain managers must
a) develop a set of pricing, delivery and payment
processes with their suppliers;
b) create metrics for monitoring and improving these
relationships.
 Make
Supply chain managers must schedule the
activities that are necessary for
manufacturing, testing, packaging and
preparation for delivery.
Deliver

Logistics companies have to

✓ develop a network of warehouses,
✓ select carriers that will get products to customers,
and
✓ establish an invoicing system for receiving
payments.
 Return
Supply chain planners have to create a responsive and
flexible network for receiving defective or surplus
(excess) products back from their customers.
Supply chain planners must provide support to those
customers who have problems with delivered products
Decisions made by Supply chain Managers

Supply chain managers make decisions at different

levels.
✓ Strategic level
✓ Tactical level
✓ Operational level
 Strategic level
Managers develop strategic decisions that affect the
long-term performance of the company such as:
✓ the size and location of manufacturing sites,
✓ partnerships with suppliers,
✓ products to be manufactured and sales markets.
 Tactical level
Tactical decisions focus on taking measures that will
produce cost benefits such as
✓ using industry best practices,
✓ developing a purchasing strategy with preferred
suppliers,
✓ working with logistics companies to develop cost-
effective transportation, and
✓ creating warehouse strategies to reduce the cost of
storing inventory.
 Operational level
Decisions at this level are made each day. Such
decisions are often administrative in nature.
Operational decisions involve
✓ making schedule changes to production,
✓ purchasing agreements with suppliers,
✓ taking orders from customers and moving products in
the warehouse
 Jobs in Logistics and Supply Chain
Logistics (distribution) and supply chain managers
organize the safe and efficient storage and
distribution of goods (merchandise).
They have to ensure that orders are fulfilled
correctly. They plan and manage the movement of
goods in the supply chain; their job is to ensure that
the right products are delivered to the right place on
time and in the most cost-efficient way.
Logistics and supply chain managers deal with many
parties including suppliers of raw materials,
manufacturers, retailers and consumers.
 Jobs in Logistics and Supply Chain
Typical employers of logistics and supply chain managers
are distribution companies, consultancies,
manufacturers, major commercial organizations,
retailers, etc.
There could be a very significant international focus
within the job, where knowledge of international
commerce, finance and import/export laws are essential
and fluency in a foreign language is recommended.
International logistics managers must have an extensive
knowledge of different modes of transportation, since
they manage the performance of international carriers
and logistics intermediaries.
Typical work activities of a logistics manager

✓ Directing inbound or outbound logistics operations, such as

transportation or warehouse activities, safety performance,
etc.
✓ Monitoring the quality, quantity, cost and efficiency of the
movement and storage of goods.
✓ Resolving problems concerning transportation, logistics
systems, imports or exports, customer issues.
✓ Keeping an accurate record of all orders, production times,
and transportation of supplies and manufactured items.
✓ Collaborating with other departments to integrate logistics
with business systems or processes, such as customer sales,
order management, accounting, or shipping.
Typical work activities of a logistics manager

✓ Supervising the work of logistics specialists,

planners, or schedulers.
✓ Allocating and managing staff resources according
to changing needs.
✓ Ordering and maintaining stock inventory
necessary for production.
✓ Dealing with customers and suppliers, and
negotiating transportation rates or services.
✓ Developing business by gaining new contracts,
analyzing problems and producing new solutions.
Retail Supply Chain Manager
The retail supply chain involves the transfer of goods and
materials from manufacturers and suppliers to retail outlets.
Retail supply chain managers are responsible for planning and
organising the entire process.
They have to work in close collaboration with other
professionals – purchasing officers, warehouse staff and
transport clerks – to ensure that
a) goods arrive at the depot as scheduled;
b) goods are in good condition;
c) goods are stored correctly;
d) goods are dispatched to customers on time.
Main responsibilities of a retail supply chain manager

✓ Planning delivery timetables.

✓ Monitoring stock levels using computer databases and
auditing inventory.
✓ Tracking the movement of goods through depots.
✓ Supervising the ordering and packaging process.
✓ Supervising the receipt, storage or dispatch of goods.
✓ Processing returned goods.
✓ Monitoring suppliers and establishing new suppliers.
✓ Negotiating and managing contracts.
✓ Providing customer service.
Skills and Interests required by retail supply chain manager
Retail supply chain managers need a variety of skills:
✓ Good planning skills.
✓ Good spoken and written communication skills.
✓ Good problem-solving skills.
✓ Excellent maths skills.
✓ Strong organizational skills.
✓ Good people skills.
✓ Good teamwork skills.
✓ Excellent computer skills: confidence in using such computer
packages as spreadsheets and databases.
✓ Good geographical knowledge.
✓ Good language skills.
Thank you!