Chapter 1Management of Business Logistics, 7 th Ed.1 BUS 3620 Logistics and SCM We start our lecture...
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Transcript of Chapter 1Management of Business Logistics, 7 th Ed.1 BUS 3620 Logistics and SCM We start our lecture...
Chapter 1Management of Business Logistics,
7th Ed. 1
BUS 3620 Logistics and SCM
We start our lecture to firstly gain the understanding of the following two fundamental questions:
What is Supply Chain Management (SCM)?
What is Logistics?
Chapter 1:
Supply Chain Management
Chapter 1Management of Business Logistics,
7th Ed. 3
Supply Chain Management: Introduction
Why do we need to know SCM?
Chapter 1Management of Business Logistics,
7th Ed. 4
Supply Chain Management: Introduction
4 Reasons: 1. Supply chain management now part of
the business vocabulary.2. Impact of global marketplace drastically
changed the landscape of business.3. Change was rapid and continuous in the
1990s.4. Doing business in the comfort zone was
no longer synonymous with success.
Chapter 1Management of Business Logistics,
7th Ed. 5
The Changing Business Landscape: Five Driving Forces
1. The Empowered Consumer2. Power Shift in the Supply
Chain3. Deregulation4. Globalization5. Technology
Chapter 1Management of Business Logistics,
7th Ed. 6
The Changing Business Landscape: Five Driving Forces
1. 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, become less royal Increased customer service increases
the importance of logistics and supply chains.
Chapter 1Management of Business Logistics,
7th Ed. 7
The Changing Business Landscape: Five Driving Forces
2. Power Shift in the Supply Chain 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.
Chapter 1Management of Business Logistics,
7th Ed. 8
The Changing Business Landscape: Five Driving Forces
3. Deregulation (4 main legs) Changing economic controls empowered
creativity and competition.1. Changes in transportation – fewer or no
economic controls over rates and services.2. Change in financial institutions blurred
traditional differences and increased competition.
3. Change in the communications industry also resulted in more competition.
4. Changes in the utility (energy) industry allows more competition.
Chapter 1Management of Business Logistics,
7th Ed. 9
The Changing Business Landscape: Five Driving Forces
4. 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-Mart’s challenges New supply sources
Chapter 1Management of Business Logistics,
7th Ed. 10
The Changing Business Landscape: Five Driving Forces
5. 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.
Chapter 1Management of Business Logistics,
7th Ed. 11
Success of story of SCM
How SCM helps to enhance the expansion of a business ventures?
Chapter 1Management of Business Logistics,
7th Ed. 12
On the Line: Extreme Enterprise
Integrating new enterprise and supply chain management solutions allowed Columbia Sportswear to keep up with sales that increased from $3 million in 1984 to $470 million in 1999.
With one store and a handful of outlets, distribution to its customers is where the rubber meets the road.
Columbia’s president was determined not to let distribution restrain growth, and backed it with money.
A 1 million square foot distribution center receives more than 2 million units/month and set a record by shipping 172,000 items in one day, and more than 2 million items in a month.
Chapter 1Management of Business Logistics,
7th Ed. 13
The Changing Business Landscape: The Supply Chain Concept
1. Definition2. Development of the Concept3. Business Case for Supply Chain
Management4. Characteristics of Supply Chain
Management
Chapter 1Management of Business Logistics,
7th Ed. 14
1. The Supply Chain Concept: Definition
An extended enterprise that crosses over the boundaries of individual firms to span the logistical related activities of all the companies involved in the supply chain.
Chapter 1Management of Business Logistics,
7th Ed. 15
2. Development of the Concept
Five main elements:1. Total systems cost - remains an important
element of logistics analysis.2. Outbound logistics - was the initial focus
with higher value finished goods.3. Inbound logistics – deregulation allowed
new focus on coordination of inbound and outbound movements.
4. Value chain analysis integrated logistics activities.
5. Terminology growing as supply chain concept matures.
Chapter 1Management of Business Logistics,
7th Ed. 16
2. Development of the Concept
A general view:
Inbound
OutboundSuppliers
1960s – physical distribution , emphasized on outbound – Figure 1.11980s – inbound logistics added, thus need coordination between both inbound and outbound systems – value chain needed – Figures 1-2-1.4
Chapter 1Management of Business Logistics,
7th Ed. 17
Figure 1-1 A View of Business Logistics in a Firm
Chapter 1Management of Business Logistics,
7th Ed. 18
Figure 1-2 Integrated Logistics Management
Identifying activities, Figure 1-3
Figure 1-4
Chapter 1Management of Business Logistics,
7th Ed. 19
Figure 1-3Generic Value Chain
Chapter 1Management of Business Logistics,
7th Ed. 20
Figure 1-4 Logistics Supply Chain
Chapter 1Management of Business Logistics,
7th Ed. 21
3. Business Case for Supply Chain Management: Why so much attention on supply chain
management? ECR and Best-in-class studies (Figures 1.5, 1.6 )
(ECR - Effective customer response) Complexity of the supply chain (Figure 1.7) Extended enterprise concept Two-way flow of: (Figure 1.7)
Products Information Cash
Inventory visibility (Figure 1.8)
Chapter 1Management of Business Logistics,
7th Ed. 22
Figure 1-5: Comparison of Average Throughput Time of Dry Grocery Chain before and after ECR Implementation
Chapter 1Management of Business Logistics,
7th Ed. 23
Figure 1-6: Total Supply Chain Management Cost --- All Sectors
0
2
4
6
8
10
12
14
1996 1997
Best-in-classMedian
Reven
ue %
Chapter 1Management of Business Logistics,
7th Ed. 24
Figure 1-7: Integrated Supply Chain
Chapter 1Management of Business Logistics,
7th Ed. 25
Figure 1-8: Running Lean
05
101520253035404550
1996 Qtr 4
1997 Qtr 1
1997 Qtr 2
1997 Qtr 3
1997 Qtr 4
CompaqDell
Number of times Dell and Compaq turn inventory over in each quarter, calculated at an annual rate.
Chapter 1Management of Business Logistics,
7th Ed. 26
4. Five Main Characteristics of Supply Chain Management
1. Inventory Visibility – managing flow and reduce or eliminate
uncertainty
Pull systems – response to demand as opposed to pushing it to advance of demand
2. Landed Cost1. Companies must realize that their
strategies may affect the landed cost – ie the final cost
2. Coordination of supply chain activities may lower the landed cost.
Chapter 1Management of Business Logistics,
7th Ed. 27
4. Five Main Characteristics of Supply Chain Management
3. Real-time two way information flows4. Customer service
levels must be tailored to each customer – not to treat all customers the same
not all customers require the same service – need to cater the special need of individual customers
5. Supply chain relationships1. Collaborative planning2. Share risks and rewards
Chapter 1Management of Business Logistics,
7th Ed. 28
Figure 1-9: Traditional Supply Chain/Pipeline Inventory Flow 1970s and 1980s
Chapter 1Management of Business Logistics,
7th Ed. 29
Contemporary Supply Chain Pipeline
Chapter 1: Summary and Review Questions
Students should review their knowledge of the chapter by checking out the Summary and
Study Questions for Chapter 1.
This is the last slide for Chapter 1
End of Chapter 1 Slides
Supply Chain Management