SUPPLY CHAIN

MANAGEMENT AND
LOGISTICS

WHAT DO YOU UNDERSTAND BY LOGISTICS

MANAGEMENT?
It is mainly a matter of operation.
Clubbed with Process & Procedures.
Monitored by Regulatory Bodies.
Logistics deals with:
Supply.
Storage.
Service.
While the fundamentals of Logistics remain same,
the actual application will differ from product to product.
This is a vast result oriented activity.
Lots of efforts need to Masterise this subject.

IMPORTANCE OF LOGISTICS
NEVER has so much technology & brain power
been applied into this subject. It is centuries old activity,
which was rather ignored or intellectually not studied to
derive the benefit of it. On the other hand, today the word
Logistics has gained such an importance & the industries
world over are very serious about their logistical operations
in order to control the possible expenditure & also to extend
high class customer service.

S.C.M & LOGISTICS INTEGRATED

SUPPLY CHAIN MANAGEMENT

A system through which the supply is moving.

LOGISTICS

A concept / operation through which the goods are

moved.

In the whole operation, S.C.M cannot deliver without the

help of Logistics but not vice versa.
S.C.M.

LOGISTICS

PARADIGM SHIFT

Globalization is integrating more & more national

economies with
the global economy.
World Trade is expanding
Technologies are advancing & becoming integrating force.
Customers are demanding value for money.
Markets are experiencing competitive pressure.
Business are struggling
It has become necessary for organization to manage
uncertainty.
In order to survive & remain profitable, companies are
concentrating on their core competencies.
Companies are producing their products in different parts of
the world & assemble at different locations, materials are
shifted to various destinations to ensure customer
satisfaction & squeeze out unproductive time & cost.
This results in expanding global supply chain & enhanced
competitiveness.

LOGISTICS DEFINED

The American Council of Logistics Management

defines logistics as the process of planning,
implementing & controlling the efficient, cost
effective flow & storage of raw materials, in
process inventory, finished goods & related
information from point of origin to the point of
consumption for the purpose of conforming to
customers requirements.

OBJECTIVES OF LOGISTICS
MANAGEMENT.

Inventory Reduction.
Reliable & Consistent
Performance.
Freight Economy.
Minimum Product Damages.
Quick Response.
Reverse Logistics.

Delivery

LOGISTICS OPTIMISATION BECOME SO

POPULAR
Logistics had its business beginnings in the
1950s in the area of physical distribution, which
has mainly concerned with outbound flow of
firms activities of reaching to the customers. This
was mainly because that the value of the
outbound products in more valuable than the
inbound raw materials. It may also be born in
mind that the outbound finished products of the
suppliers firm would be the inbound products of
the manufacturing unit. Managers as well as
academicians became very interested in physical
distribution management since both outbound
and inbound products are cost of sensitive. Since
costs are difficult to pass on to consumers,
manufacturers are trying to lower their costs in
every way.

7 Rs DEFINITIONS OF LOGISTICS

Right Product.
Right Customer.
Right Quantity
Right Condition
Right Place
Right Time
Right Cost

These indicates the following role for

Logistics.

LOGISTICS FUNCTIONAL AREAS

Facility Location and Network

Design.
Information Management.
Transportation Management.
Inventory Management.
Warehouse Management.
Materials Handling.
Packaging.
Reverse Logistics.

IMPACT ON CUSTOMER SERVICE

Since consumer demands are
constantly changing, companies must
develop the infrastructure and culture
to quickly and efficiently adapt to
become more customer centric. By
increasing the integration through out
the logistics network, a company can
increase its responsiveness to the
customer, which will positively affect
its customer service levels

BENEFITS & OBSTACLES

BENEFITS
Decreased order cycle time
Decrease overall cost
Improved customer service
Financial benefits
OBSTACLES
Obtaining a balance between in house staff
&outside resources
Difficulty to fully integrate
Customer service level
Resistance to change
Information system

LOGISTICS IN THE VALUE CHAIN

Economic Utility or Value is achieved in a product or a
service in 4 ways:
1. FORM.
2. TIME.
3. PLACE
4. POSSESSION.
The value or utility is provided as mentioned hereunder
at different stages:
Form Utility: Manufacturing Activities.
Time & Place Utility: Logistics Activities
Possession Utility: Marketing Activities.

 FORM UTILITY :

is achieved by product or service design and

manufacturing. Integrated logistical activities can also
provide form utility. E.g. breaking bulk, breaks down
bulk shipments into smaller sizes for distribution to
individual customer. Product mixing is another
activity which adds form utility in logistics by mixing
items from different shipments received, and create
individual shipments in packages are required by the
customers. These activities typically take place at
distribution centers to change a products form by
changing its size, shipment combination & packaging.

 PLACE UTILITY:

Logistics provide place utility by moving

goods from production locations to demand

locations or markets. Logistics created
place utility by transportation.

TIME & POSSESSION UTILITY

TIME UTILITY
makes goods and services available when

consumers demand them. Logistics provides

time utility through strategic inventory
positioning and maintenance. E.g. logistics
creates time utility by making fresh
products available at locations of demand.

POSSESSION UTILITY
is created through promotion activities of products &
services. These activities increase the desire to possess a
good or to benefit from a service. Marketing provides the
possession utility after which it is necessary for logistics
to provide the time & place utility for fulfillment. Also,
time & place utility can be provided by logistics only when
the demand for the product or service exists due to
possession utility creation by marketing. In many business
strategies, the concept of value chain management plays a
central role.

The value chain of Porter (1985) is composed of value activities and a

margin, which is achieved by these activities. Value activities can be
divided into physically & technically different groups of activities. Porter
differentiates between primary activities and support activities. Primary
activities are those which are directed at the physical transformation &
handling of the final products, which the company delivers to its
customers. Support activities enable & support the primary activities.
They can be directed at supporting one of the primary activities as well
as supporting the whole primary process.
Porter differentiates between 5 generic categories of primary activities:
1. Inbound Logistics 2. Operation 3. Outbound Logistics
4. Marketing & Sales & 5. Services.
Support Activities are grouped into 4 categories:
1. Procurement
2. Technology Development
3. Human Resource Management
& 4. Firm Infrastructure.

3 PL means 3rd PARTY LOGISTICS. 4 PL means 4th PARTY

LOGISTICS.
What is 3 PL?
The trend which developed during 1990s, companies
started focusing on the core competencies & outsourced
their business support activities. This is nothing but a
BPO activity.
What is 4 PL?
4 PL is nothing but an extension of 3 PL for further
specializing in the BPO activity.
Parent companies are directly contracted with 3 PL
companies but 4 PL agreements are not with parent
companies but with 3 PL service provider.

The Evolution Logistics Outsourcing

is explained here under:
Future
Early 00
Late 90s
Logistics
System
Mid 90s
transportation
services
Early 90s

4 PL
3 PL
Complex

Warehousing
Related
Transportation Services
Logistics Outsourcing

These services are typically in the form of:

Materials Requirement Planning (MRP).
Inventory Management.
Distribution Management.
Warehousing.
Electronic Data Interchange (EDI).
Cargo Packing.
Freight Forwarding.
(Courier / Transportation).

 Asset Reduction.
Workforce Reduction.
Freedom from Restrictive Labour

Environment.
Expanded Geographic Coverage.
Operational Flexibility.
Reduced Cycle Time / Improved
Responsiveness.
Supply Chain Integration.
Logistics Operations Cost Reduction.

A new concept in Supply Chain Outsourcing.

Next Level in Logistics Outsourcing.
Forms an alliance between Best of Breed 3rd
Party Service Provider.
Technology Provider.
Management Consultants.
Unique Comprehensive Solutions.

While 3 PL providers have focused on

operational issues such as implementation &
execution, 4 PL brings in managerial inputs
to the table, thereby providing the complete
supply
chain
synchronization
&
collaborative advantages.

 Reinvention Aligns business strategy with supply chain

strategy & is facilitated by technology & optimizes operations.

Transformation Improving the supply chain functions
that are internal to the organization. This includes Sales &
Operation planning, distribution management, procurement
strategy & customer support. The main trust is bringing the
best breed applications.
Implementation Business process realignment, technology
& system integration.
Execution Takes operational responsibility, transportation
management, warehousing operation, procurement, supply
chain, information technology, network management,
inventory management, customer service management,
administration & manufacturing.

A supply chain includes all the process that add customer desired value
to material and bring it to the customer. This value gets added at
various stages of the journey that material takes till it reaches the
customer. Supply chain encompasses all these value adding stages.

SCM DEFINED- Cisco

SCM aims to increase sales, reduce costs, & make full use of asset by
streamlining the interaction & communication of all participants along
the supply chain. SCM solutions use networking technology to link
suppliers, distributors & business partners to better satisfy the end
customer, while feeding real time data about customer demand into the
partners production & distribution process.

SUPPLY CHAIN CATEGORIES

1.

Raw Supply Chain

2.

Ripe Supply Chain

3.

Internal Supply Chain

4.

Extended Supply Chain

5.

Self Monitored Supply Chain

6.

Outsourced Supply Chain

7.

Production Oriented Supply Chain

8.

Financial Oriented Supply Chain

9.

Market Oriented Supply Chain

10.

Value Chains (Complete Supply Chains)

OBJECTIVES OF SCM
The most important objective is unification of all the functions &
activities that are required throughout the product life cycle from lust to
dust. This unification or integration allows a smooth passage of
information & products throughout the system. Managing the complete
product life cycle includes managing the design, source, make &
delivery. The principal objectives are

To reduce the physical supply chain links

To define supply chain responsibilities to a specific core service

competency.

To decrease the time & cost of getting end user products in volume to
markets worldwide.

SCM CONSTITUENTS

Information

Supply

Production

Distribution

Supply Stock (Inventory)

SCM ACTIVITIES

Plan

Source

Make

Deliver

Return

WEB-CENTRIC SUPPLY CHAIN

The internet enabled e-business applications
have integrated internet with all branches of
supply chain & emerged as the most cost
effective means of supply chain operations.
E-BUSINESS APPLICATIONS

E-Commerce

E-Procurement

E-Collaboration

WHY SCM IS VITAL FOR

ORGANISATIONS?

THE CUSTOMER HAS BEEN PRONOUNCED THE

ULTIMATE KING DECIDING THE WORTH OF ANY
BUSINESS.
PRODUCTS HAVE TO BE MANUFACTURED AS PER THE
NEED OF THE CUSTOMERS.
THERE IS SERIES OF ACTIVITIES IN MANUFACTURING.
ACTIVITIES START AFTER THE CUSTOMER TRIGERS
THE DEMAND.
ACTIVITIES
Procurement of raw materials
Manufacturing process
Distribution of the product
Finally reaching the product to the customer
THE ABOVE OUTLINES THE IMPORTANCE OF SCM
FOR CORPORATES AND COMPANIES AND THE
CONTRIBUTION THAT IT CAN MAKE TO THEIR
BOTTOMLINES.

SUPPLY CHAIN EXCELLENCE

SCE has four dimensions:
1. Market Dimension
Legal
Political
Cultural
Technological
Economical
2. Collaborative Dimension
3. Operational Dimension
4. Strategic Dimension

CHECKLIST FOR EXCELLENCE

Achieving Internal Excellence
Ensuring Visibility and Openness
Ensuring Partnerships and Collaboration
Ensuring Amalgamation
Momentum and Ascent

Thank You