MG 377 Logistics

Chapter 1 – Supply Chain

Logistics vs Supply Chain Management

  1. What is a supply chain?
  2. A grouping of suppliers, producers and sellers which represent the linkage of companies that provide the materials/components/services to provide a product valued by the consumer.
  3. Recognition that the creation and delivery of a product/service is a process that consists of companies beyond the boundaries of our company’s output.
  4. Supply Chain Management - The design and management of seamless, value-added processes across organizational boundaries to meet the real needs of the end customer. *
  5. The management of upstream and downstream relationships with suppliers and customers in order to deliver superior customer value at less cost to the supply chain as a whole.
  6. Upstream is movement in the opposite direction of the flow
  7. Downstream is movement in the same direction of the flow.
  8. Focus on management of relationships in order to achieve a more profitable outcome for all parties in the chain.
  1. How does Logistics differ?
  2. Some say it is a subset of the supply chain which includes the transportation, warehousing and inventory control.
  3. Some say Logistics management is the flow of goods, information and other resources including energy and people between the point of origin and the point of consumption in order to meet the requirements of consumers at the lowest cost possible.
  4. SCM is the integration of Logistics management between all companies within the supply chain.
  5. Some say it is involved from the inception to the delivery of a final product/service to the consumer. Possibly beyond if you include a green perspective.
  6. It is the process of strategically managing the procurement, movement and storage of materials, parts and finished inventory through the organization and its marketing channels in such a way that current and future profitability are maximized through the cost-effective fulfillment of orders.
  7. Essentially a planning orientation and framework that seeks to create a single plan for the flow of products and information through a business
  8. This text defines Logistics in terms of management of the following which are integrated throughout the network of the SC.
  9. Ordering processing
  10. Inventory
  11. Transportation
  12. Warehousing and materials handling
  13. packaging
  1. How does today’s supply chain differ from the past?
  2. Old school relied on phone calls, faxes, order only when needed, very isolationist.
  3. Today it is the recognition that communication thru advanced technology and a willingness to organize according to value added
  4. Virtual corporation
  5. Today’s supply chain is more demand oriented, thus driven by the market demand
  6. Supply chain management or demand network management?
  1. Generalized supply chain
  2. See graph on pg 7 of text
  3. Flow of materials
  4. Flow of information
  5. Key functions
  6. Multi-level
  7. Draw score model

However you define a logistics and supply chain it is clear that it must be coordinated such that it adds value to the customer by meeting their requirements.

  1. How does an integrated supply chain add value?
  2. Economic value – economy of scale resulting in lower total cost
  3. Market value – economy of scope; broad range of relevant prods/services
  4. Relevancy value – right prod, right time, right location, right price

What should be coordinated in an integrated supply chain? What should the coordination look like?

  1. Information and Supply Chains (Bowersox etal)
  2. Information begins with the inception of a design idea (feasibility, marketing, competition)
  3. Transaction system –ability to track success for each transaction
  4. Order mgmt.
  5. Inventory assignment
  6. Order selection
  7. Shipping
  8. Pricing and invoicing
  9. Customer inquiry and service
  10. Management – metrics available to see how we did relative to a standard
  11. Financial, cost metric
  12. Customer service metric
  13. Productivity metric
  14. Quality metric
  15. Decision Analysis – using data to plan how we will meet anticipated demand over the next year
  16. Vehicle routing & scheduling
  17. Inventory levels and mgmt.
  18. Vertical integration vs 3PL
  19. Network of facility locations and integration
  20. Strategic Planning – using data to determine how do we stay ahead or catch up
  21. Strategic alliance formulations
  22. Development & refinement of supply chain capabilities and management
  23. Focused/profit-based customer relationship mgmt.
  1. SCM core functions (SCM & Logistics: What’s the Difference; Inbound Logistics, Feb 2003)
  2. Demand Planning and sales forecasting
  3. Manufacturing and operations strategies
  4. Developing and creating products and services
  5. Postponement strategies
  6. Purchasing and supply Management
  7. Identification of suppliers
  8. Ordering and replenishment processes
  9. Supply Chain Logistics
  10. Communication strategies both up and down stream
  11. Metrics to determine inventory throughout supply chain
  12. Reverse supply chains
  13. Recycling of products
  14. Recycling on packaging
  15. Return of products
  16. Info on usage
  1. Supply Chain Information System Modules
  2. ERP
  3. Moves beyond MRP
  4. Includes order entry
  5. Inventory assignments
  6. Transportation
  7. Accounting
  8. HR capability
  9. Focus is to make decisions that are based on all aspects of the business not just one area.
  10. Communication systems
  11. Enterprise planning and monitoring
  12. Enterprise operations
  13. Financial and operations reporting

Methods used to communicate all relevant info within our company;

  1. ERP components
  2. Enterprise integration and admin
  3. General admin
  4. Accounts receivable and payables
  5. Financial inventory accounting
  6. General ledger
  7. HR
  8. Though some say that these components do not have a direct relationship they do have on decisions. Therefore I think they do.
  9. The ability to understand accts receivable relates to our profitability
  10. Our accounts payable relate to our inventory decisions
  11. HR relates to our capacity and capability, both now and in the future
  12. General ledger indicates that what decisions or planning we are doing now does it make any money.
  13. Enterprise Supply Chain Operations
  14. Customer relations
  15. Logistics
  16. Manufacturing
  17. Purchasing
  18. Inventory deployment
  19. These all have a direct relationship to our supply chain efficiency/value added
  20. Enterprise Planning and Monitoring
  21. Sales and operations planning
  22. Demand and resource allocation
  23. Supply chain visibility
  24. Shipment tracking
  25. Supply chain compliance
  26. Metrics

Need to connect ERP to Customers and Suppliers

  1. Communication Technology
  2. How do we communicate between suppliers
  3. With customers
  4. With support functions outside our company
  5. The key is to create a network so that all components of the supply chain know what the other is doingor needs.
  6. How can we collaborate
  1. Consumer Connectivity
  2. Needs
  3. Reverse logistics
  4. Order taking
  1. Integrative Management and Supply Chain
  2. The key is to redirect traditional efforts to make us process efficient rather than functionally efficient.
  3. Eight key processes
  4. Demand planning responsiveness
  5. Maximize responsiveness to customer requirements
  6. Goes beyond product functionality
  7. Customer Relationship Collaboration
  8. Info sharing of customer
  9. Creation of an agile process
  10. Order Fulfillment/Service Delivery
  11. From order to delivery
  12. Goes beyond customer expectations
  13. Product/Service development launch
  14. Indicates a need for supply chain and logistics to be involved with product development to make sure that it can be delivered as promised
  15. Iphone 5 as an example
  16. Manufacturing Customization
  17. Use of customization techniques
  18. Postponement
  19. 3D printing
  20. Supplier relationship Collaboration
  21. Joint planning
  22. Demand sharing
  23. Product development
  24. Life Cycle Support
  25. Repairs
  26. Warranty
  27. Maintenance
  28. Questions
  29. Reverse Logistics
  30. Returns
  31. Inventory levels
  32. Shoes

What should we consider in achieving a cost and value advantage?

  1. INTEGRATED SERVICE PROVIDERS
  2. Outsourcing
  3. 3PL
  4. 4PL
  5. Value added
  6. Core Competency
  1. The 4 R’s in developing an agile Supply Chain
  2. Responsiveness
  3. Push vs pull systems
  4. Collaboration throughout supply chain
  5. Allowing supply chain to participate from inception of product
  6. Designing supply chain simultaneously as product development
  7. Fewer restarts
  8. Result is quicker time to market
  9. Postponement
  10. Product
  11. Geographical
  12. Hold in a central warehouse until needed somewhere globally in the network; opposite of Product postponement
  13. Barriers
  14. To maintain increased quarterly profits at the expense of long term solutions
  15. How to develop sustainable collaborative relationships
  16. Trust
  17. Reliability
  18. Increased reliability in product and delivery reduces inventory
  19. Reduction in process variability
  20. Resilience
  21. Ability of the supply chain to cope with unexpected circumstances.
  22. Relationships
  23. Collaboration with customers
  24. Collaboration with suppliers
  1. Advantages to an agile supply chain
  2. Less inventory
  3. Reduced need for distribution centers
  4. Less working capital required
  5. Focus on supply chain costs not just economies of scale
  6. Ability to compete on service vs costs
  7. Focus is on meeting customers’ requirements (including demand, availability and cost)
  8. Recognition that today’s competition is not based on a company to company basis but on a supply chain to supply chain basis; whoever has the most agile supply chain wins.
  1. Financial benefits of an agile supply chain
  2. Quicker cash to cash conversion
  3. Dwell time – ratio of time that a unit of inventory is in storage compared to the time that it is moving
  4. Reduce duplicate inventory and non-value added work
  5. Cash Spin -
  1. Globalization
  2. Creates complexity in supply chain (communication and logistics)
  3. Forces downward pressure on pricing
  4. Trade barriers

Assignment:

Answer the 6 questions on page 27.

Discuss during 2nd class

Cover one or more challenge questions in 3rd class or identify a case/ article that students can work in groups

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