Lecture 10 logistics and supply chain
Transcript of Lecture 10 logistics and supply chain
LOGISTICS AND SUPPLY CHAIN
WHAT IS SUPPLY CHAIN?
Supply chain is the network of facilities (warehouse, factories, terminals, ports, stores and homes), vehicles (trucks, trains, planes, ocean vessels, and logistic information system (LIS) connected by an enterprises supplier’s suppliers and its customers’ customers).
Supply
Sources:plantsvendorsports
RegionalWarehouses:stocking points
Field Warehouses:stockingpoints
Customers,demandcenterssinks
Production/purchase costs
Inventory &warehousing costs
Transportation costs
Inventory &warehousing costs
Transportation costs
WHAT IS SUPPLY CHAIN?
Supply Chain Management (SCM) is now an expanded responsibility for business enterprises to attain value optimisation.
Integrates Procurement, Production, Distribution and includes all functions in fulfilling a customer request. These include but not limited to new product development, marketing, operations, distribution, finance and customer service.
Flows in a supply chain
Customer
Information
Product
Funds
LOGISTICS vis a vis SUPPLY CHAIN
Logistics include physical distribution,warehousing,freight transportation.
Logistics is defined by the Council of Logistics management as “that part of the supply chain that plans, implements and controls the efficient, effective flow and storage of goods, services and related information from the point of origin to the point of consumption in order to meet customers’ requirements”.
Why is supply chain management so important?
• To gain efficiencies from procurement, distribution and logistics
• To make outsourcing more efficient• To reduce transportation costs of
inventories• To meet competitive pressures from
shorter development times, more new products, and demand for more customization
ELEMENTS OF SUPPLY CHAIN
Simple supply chain is made up of several elements
A. Customers
B. Planning
C. Purchasing
D. Inventory
E. Production
F. Transportation
linked by movement of products.
It operates at three levels: Strategic,Tactical,Operational
ELEMENTS OF SUPPLY CHAIN
Strategic -> Product Development, Customers, Manufacturing, Suppliers,Logistics
Tactical -> Cost benefit measures vizIndustry Best practices, Purchase Strategy,Warehouse Strategy, Inventory Control,Cost effective Transportation
Operational-> Make schedule changes to production,Purchasing agreements with Suppliers,Taking orders from cutomers,Moving Products
KEY DRIVERS OF SUPPLY CHAIN
The Key drivers for best in class supply chain are
Inventory
Transportation
Information
Facilities
Need to be considred in the Design,Plam and Operation stage
KEY DRIVERS OF SUPPLY CHAIN
Design Phase
- Structuring the Supply Chain, Chain configuration and the processes at each stage
- Decisions on location, capacities, warehousing facility, products, mode of distribution (Multimodal), type of info systems
- Long Term and expensive to alter on short notice
- To take into account uncertainties in market conditions
KEY DRIVERS OF SUPPLY CHAIN
Planning Phase To define set of operating policies that govern short
term operations Establish constraint within which planning must
be done. Forecast of sale / market to supply point
linkage / planned buildup of inventories Make or buy decisions, business continuity, size of marketing promotion. Consider uncertainty of demand, exchange rate,
taxation issues Use the flexibility in the design to optimize the
performance in short term
KEY DRIVERS OF SUPPLY CHAIN
Operation Phase
Time horizon – weekly / daily-
Implement operating policies in the best possible manner
Scheduling process
Exploit reduction of uncertainty and optimize performance