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LOGISTICS WEEK 1

The document outlines the fundamentals of supply chain management, detailing its definition, components, and the challenges in matching supply and demand. It describes the phases of supply chain decision-making, including strategy, planning, and operations, and emphasizes the importance of logistics in delivering products to customers. Additionally, it introduces the concept of e-logistics and its role in enhancing supply chain efficiency through technology and innovation.

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Gabriela Diaz Serna
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15 views

LOGISTICS WEEK 1

The document outlines the fundamentals of supply chain management, detailing its definition, components, and the challenges in matching supply and demand. It describes the phases of supply chain decision-making, including strategy, planning, and operations, and emphasizes the importance of logistics in delivering products to customers. Additionally, it introduces the concept of e-logistics and its role in enhancing supply chain efficiency through technology and innovation.

Uploaded by

Gabriela Diaz Serna
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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LOGISTICS – WEEK 1

LOGISTICS AND SUPPLY CHAIN MANAGEMENT

CONCEPTS INSIDE A SUPPLY CHAIN

WHAT IS A SUPPLY CHAIN?

•A supply chain is the system of raw materials, people, activities, information and resources
involved in moving a product or service from supplier to customer. the end customer customer
request

•Supply chain activities transform raw materials and components into a finished product that is
delivered to

•All stages involved, directly or indirectly, in fulfilling a

•Stages: Manufacturers, Suppliers, Transporters, Dist./WH, Retailers, and Customers

•Within the company, supply chain includes all functions development, marketing, operations,
distribution, finance, customer service)
TRADITIONAL VIEW: COST BREAKDOWN OF A MANUFACTURED GOOD

Supply Chain Management is “the design and management of processes across organizational
boundarieswith the goal of matching supply and demand in the most effective way”

WHY IT SO DIFFICULT TO MATCH SUPPLY & DEMAND

• Uncertainty in demand and/or supply


• Changing customer requirements (CD players & Fax machines are outdated!!!)
• Decreasing product life cycles (faster, better products)
• Fragmentation of supply chain ownership
• Conflicting objectives among supply chain stakeholders
• Conflicting objectives even within a single firm

– Marketing/Sales: more finished goods inventory, fast delivery, many package types, special
wishes/promotions

– Production: bigger batch size, depots at factory, latest ship date, decrease changeovers,
stable production plan

– Distribution: full truckload, low depot costs, low distribution costs, small # of SKUs, stable
distribution plan

A picture is better than 1000 words!


How many words would be better than 3 pictures?
SCM IN A SUPPLY NETWORK

· Supply Chain Management (SCM) is concerned with the management and control of the
flows of material, information, and finances in supply chains.

· The task of SCM is to design, plan, and execute the activities at the different stages
so as to provide the desired levels of service to supply chain customers profitably

THE OBJECTIVE OF A SUPPLY CHAIN

•Maximize overall value generated (SC Surplus)

Supply Chain Surplus= Customer payment – Supply Chain Cost

• SC Surplus is strongly correlated with profits

Difference between value of final product is to thecustomer and the costs the entire SC incurs
in fulfilling the customer request

DECISION PHASES IN A SUPPLY CHAIN

1. Supply chain strategy or design ‐ Strategic


 How to structure the supply chain over the next several years
2. Supply chain planning‐ Tactical
 Decisions over the next quarter or year
3. Supply chain operation‐ Operational
 Daily or weekly operational decisions
SUPPLY CHAIN STRATEGY OR DESIGN

•Decisions about the configuration of the supply chain, allocation of resources, and what
processes each stage will perform

•Strategic supply chain decisions examples:

 Which SC functions to outsource?


 Locations and capacities of facilities?
 Which products to be made or stored at various locations?
 Modes of transportation?
 Type of Information systems?
 Risks and contingency plans strategic objectives

•Goal of supply chain design must be to support strategic objectives

•Supply chain design decisions are long‐term and expensive to reverse – must take into
account market uncertainty

SUPPLY CHAIN PLANNING

•Definition of a set of policies that govern short‐term operations


strategic phase

•Fixed by the supply configuration from

•Goal is to maximize supply chain surplus given established constraints

•Starts with a forecast of demand in the coming year

•Examples of Planning decisions:

– Which markets will be supplied from which locations?


– Planned buildup of inventories?
– Inventory policies?
– Timing and size of market promotions?

•Must consider demand uncertainty, exchange rates fuel prices, competition over the time
horizon in planning decisions

SUPPLY CHAIN OPERATION

•Time horizon is weekly or daily

•Decisions regarding individual customer orders

•Supply chain configuration is fixed and planning policies are well defined

•Goal is to handle incoming customer orders as effectively as possible

•Examples: Allocate orders to inventory or production, set order due dates, generate pick lists
at a warehouse, allocate an order to a particular shipment, set delivery schedules, place
replenishment orders

•Much less uncertainty (short time horizon)


WHAT IS LOGISTICS?

Logistics is necessary to:


 Move goods from suppliers to buyers
 Move finished goods to the customer

Products have little value to the customer until they are moved to the customer’s point of
consumption
 Time utility- products are delivered at the right time.
 Place utility- products are delivered to the desired location

CLASSIFYING LOGISTICS COMPANIES


 A move away from own-account transportation to third-party transportation -
creating logistics service providers (LSPs)

LSPS VERSUS 3PLS

· Considerable overlap between the terminology


· All companies that provide logistics services are LSPs
· Provide reliable & timely delivery required by SCM
· Used to significant degree by international logistics
· Favoured by small businesses
· LSPs that provide multiple logistics services, often integrated, are third party logistics
providers (3PLs)
CONCEPT OF E-LOGISTICS

· Do not have a fix definition


· The terms “electronic logistics”, “e‐logistics”, “internet‐enabled logistics” or “e‐business (e‐
commerce) logistics” have been loosely used in both academia and practice.
· Some academics consider e‐logistics as a supportive delivery process for fulfilling online e‐
commerce orders.
· e‐logistics implies the use of information and communication technology to support the
provision and execution of a broad range of logistics activities.
· Above narrowly defines the e‐logistics utility in an online business to customer (B2C) or
business to business (B2B) setting,

THE HISTORICAL DEVELOPMENTS OF E-LOGISTICS SYSTEMS

BUILDING E-LOGISTICS CAPABILITY


· E-logistics involves relational configurations, technological connectivity and process
integration.
· Objective: Digital supply chains are configured and it should be determined by business
strategy and so companies are more agile and fast in order to sense and react quickly to
customer demand.
· Regional level: government bodies and import nodes in a global supply chain (i.e. seaports
and airports) need to tackle the complex issues of visibility and interoperability in order to
streamline the information flow and integrate information that is used by all the actors involved
· Organisational level: the designed capability should be fit for the information processing
needs
of the key stakeholders involved.
· Companies need to develop a well-articulated e-logistics strategy that drives business
performance via capturing new business opportunities through innovation and creating value
in core businesses to serve customers better

VALUE GENERATION VIA E-LOGISTICS (1)


VALUE GENERATION VIA E-LOGISTICS (2)

VALUE GENERATION VIA E-LOGISTICS (3)

VALUE GENERATION MODEL – NEW OPPORTUNITIES?

For example,

If we would like to use Drone to deliver the NHS blood testing samples, is it possible?

Challenges: Only a few application examples of Drone delivery can be found in UK, no
successful example to follow.

i.e. A lot to develop and consider, such as…

• get permission from UK Civil Aviation Authority


• at least 150 metres away from residential, recreational, commercial and industrial sites
• can be flown in congested areas? <250 gm can be flown in congested areas, but can it bring
a little parcel?
• Insurance…..
KEY POINT

Supply chain decision phases may be categorized as design, planning, or operational,


depending on the time frame during which the decisions made apply.
Design decisions constrain or enable good planning, which in turn constrains or enables
effective operation.

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