Post on 06-Apr-2018
8/3/2019 Logistics and Supply Chain Managment
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Learning Objectives• Principles of materials management, logistics
and supply chain management • Logistics interface with other functions • Inventory management principles and
systems • Warehousing management fundamentals • Transportation management practices • How IT enables the logistics function • Understand about the performance
measurement of the logistics function
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Materials Management
• Materials forms the largest single cost item inmost manufacturing companies – needs to be
carefully managed
• Materials management function includesplanning and control, purchasing and storesand inventory control
• Materials management is the precursor to logistics and supply chain management
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Logistics Defined
• Logistics means having the right thing, atthe right place, at the right time
• The procurement, maintenance, distributionand replacement of personnel and materials – Webster’s Dictionary
• The science of planning, organizing and
managing activities that provide goods orservices – Logistics World, 1997
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Logistics
• Functions: planning, procurement,transportation, supply and maintenance
• Processes: requirements determination,acquisition, distribution and conservation • Business: science of planning, design and
support of business operations of
procurement, purchasing, inventory,warehousing, distribution, transportation,customer support, financial and humanresources
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Scope of Logistics
• Choice of markets • Procurement • Plant location and layout
• Inventory management • Location and management of warehouses • Choices of carriers, mode of transport • Packaging decisions
• Relevant to all enterprises: manufacturing,
Government, Institutions, serviceorganisations
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Components of LOGManagement
• NaturalResources
(land,facilities
Equipment) • HR
• Finance • Informati
on
• MarketingOrientation
(competitiveAdvantage) • Time andPlace utility • Efficient
move to customer
Customer service Demand forecasting
Distribution Communications Inventory control
Materials handling Order processing
Parts and service support Plants and warehouse selection
Procurement Packaging
Return goods handling Salvage and scrap disposal Traffic and transportation Warehouse and storage
Input OutputLogistics Activities
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Links and Flows
Customer’s
customer
Supplier’s supplier
SupplierLead FirmCustomer
General cash flow
Information flow
Information flow
General material flow/ service flow
Inbound / Upstream logisticsOutbound / Downstream logistics
Source: ICFAI
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SDM – Ch 15 Tata McGraw Hill Publishing
Logistics and Marketing
• Interface on:
o Product design and pricing o Customer service policies o Sales forecasts and order processing o Inventory policies and location of warehouses o Channels of distribution and despatch planning o Transportation to reach products to customers
• Production wants larger production runs tominimise time spent on set up changes on the
machines. Marketing wants smaller runs of avariety of products.
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SDM – Ch 15 Tata McGraw Hill Publishing
The Value Chain
Company Infrastructure
Organisation, people, methods
Systems & technology
Procurement
Inbound logistics Operations
Outbound logistics
Marketing & sales
Service
Primary activities
S U P P P O
R T
margin
margin
Source: Michael Porter
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SDM – Ch 15 Tata McGraw Hill Publishing
Logistics Plan Outline• Internal analysis (current position)
o Organisation o Human resources o Transportation o Relations with internal customers o
Quality of product
o Quality of Service • External / situation analysis
o Competitor logistics performance o Trends o External environment / economy o Public, private and contract warehouse o Public, private and contract carriage
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SDM – Ch 15 Tata McGraw Hill Publishing
Principles of Logistics Excellence
Alling & Tyndall
Strategic Operational
Link logistics to corporatestrategy Organise comprehensively Use the power of information Emphasise human resources Form strategic alliances
Focus on financialperformance Target optimum service levels Manage the details Leveraging logistics volumes Measure and react to
performance
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Logistics Focus Areas
Customer service related Operations related
Packaging
Order processing Spare parts and service support After sales Customer servicesupport Demand forecasting Distribution communications Return goods handling
Plant and warehouse site location ProcurementInventory control Materials handling Salvage and scrap disposal Traffic and transportation Warehousing and storage
Logistics may be confined to the company whereasSCM extends beyond
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Supply Chain Management
• Business context: o Globalization of the market place o Advances in technology o Increasingly demanding, informed customer base o
Purchase decisions on dimensions of quality, priceand time • Innovative supply chain:
o To meet customer driven challenges o To reduce costs o Improve service levels o Enhance speed to market
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Supply Chain Integration
• Optimising the supply chain requiressupplier and customer involvement to
integrate processes, policies, systems,database and strategies betweendiverse trading partners
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Integrated Supply Chain Management
Manufacturing/ Re-
manufacturing/ Assembly
Demand & LeadTime Management
Storage &Transportation
Materials
Management
Inventory Managementand control
CustomerAnalysis
Purchasing/SupplierPartnering
Order Fulfillment
Supply Chain Integration
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Functions
Warehouses
Materialhandling Storage
functionCustomer
serviceInformation
transfer
Temporary
Permanent
Receive goods Identify goods
Sort goods Despatch to
storage Hold inventory Recall, select
goods Marshal theshipment
Despatch theshipment
Prepare records
and
advices
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Purpose of Warehousing
• To provide desired level of customerservice at the lowest possible total cost
• It is that part of the firm’s logistics system thatstores products (RM, Packing Materials, WIP,FG) at and between point of origin and pointof consumption and provides info tomanagement on the status, condition anddisposition of items being stored
• Distribution warehousing relates mainly to FG
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Reasons for WarehousingService related Cost related
Maintain source of supply Support customer service policies Meet changing market conditions Overcome time and spacedifferentials Support JIT programs of suppliersand customers Provide customers with the rightmix of products at all times Temporary storage of materials tobe disposed or re-cycled
Achieve production economies Achieve transportation economies Take advantage of QuantityPurchase discounts and forwardbuys Least Logistics cost for a desiredlevel of customer service
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Warehouses
• Support manufacturing • Mix products from multiple facilities for
shipment to a single customer • Break-bulk • Aggregate • Used more as a ‘flow-thru’ point than as
a ‘hoarding’ point
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Reverse Logistics
• Movement of goods from the market orcustomer back to the company
• The need: o Increased awareness of the environment o Stringent legislationo For some it is part of the business o Profitability of dealing with scrap, surplus
• Surplus, obsolescence can result due to: o Over optimistic sales forecasts, change in product
specs, errors in estimating material usage, lossesin processing or overbuying based on incentives
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• THANK YOU