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Introduction into Logistics

Introduction into Logistics. PhD Natasha Lutovinova Logistics Lecturer E-mail: Lutovinova.N@nhtv.nl Room: G1.006. Handbook: Paul R. Murphy & Donald F. Wood, Contemporary logistics (New Jersey 2011), 10 th edition. 3. Introduction into Logistics Course Outline. 12.05 Introduction

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Introduction into Logistics

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  1. Introduction into Logistics PhD Natasha Lutovinova Logistics Lecturer E-mail: Lutovinova.N@nhtv.nl Room: G1.006

  2. Handbook: Paul R. Murphy & Donald F. Wood, Contemporary logistics (New Jersey 2011), 10th edition 3

  3. Introduction into Logistics Course Outline 12.05 Introduction 13.05 SCM Concept, Inventory 14.05 Demand Management, Warehousing Management 15.05 Transportation Management, International Logistics 16.05 Poster Session

  4. CHAPTER 2 The Supply Chain Management concept 5 - 2

  5. Learning objectives • To learn about supply chains and their management • To realize the importance of leveraging technology • To appreciate barriers to supply-chain management 6 - 2

  6. Logistics and the Supply Chain • Logistics: what it is • Council of Logistics Management definition: • “Logistics is that part of the supply chain process that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers’ requirements.” 7 - 1

  7. “The scope of logistics spans the organization, from the management of raw materials though to the delivery of the final product.” Inbound Logistics Production Logistics Outbound Logistics Physical Supply Materials Management Physical Distribution Reverse Logistics 8 - 2

  8. The Supply Chain Management concept • A supply chain “encompasses all activities associated with the flow and transformation of goods from the raw material stage (extraction), through to the end user, as well as the associated information flows.” Source: Robert B. Handfield and Ernest L. Nichols, Jr., Introduction to Supply Chain Management 9 - 2

  9. The Supply Chain Management concept • “Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all Logistics Management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence , Supply Chain Management integrates supply and demand management within and across companies.” 10 - 2

  10. Figure 2-1: Different Supply Chain configuration Figure 2-1: Different Supply Chain Configurations 11 - 2

  11. Source: Van Goor, Ploos van Amstel & Ploos van Amstel, European distribution and supply chain logistics (Groningen 2003), p.49 12 - 2

  12. Information flow Tier 2 Materials Supplier Customer Tier 1 Materials Supplier Distributor Tier 2 Materials Supplier Customer Manufacturer Tier 1 Materials Supplier Tier 2 Service Supplier Customer Distributor Tier 2 Materials Supplier Tier 1 Service Supplier Customer Tier 2 Materials Supplier Primary cash flow Primary product flow The Supply Chain Management concept 13 - 2

  13. Supply chain management is a wider concept than logistics 14 - 2

  14. Supply chain example: lemonade stand Suppliers’ suppliers Suppliers Producer Retailer Customer Corner grocery Mom Kids Consumers Utilities Builders Other merchants Growers Miners Utilities Manufacturers 15 - 2

  15. Hospital Services also have supply chains: 16 - 2

  16. The Supply Chain Management configuration 17 - 2

  17. The Supply Chain Management concept Key attributes of Supply Chain Management • Customer power • Fast supply chain • Agile supply chain • Perfect orders • Long-term orientation • Partnerships • Leveraging technology • Enhanced communication across organizations 18 - 2

  18. The Supply Chain Management concept Key attributes of Supply Chain Management • Inventory control • Bullwhip effect • Interorganizational Collaboration • Supply Chain collaboration http://www.youtube.com/watch?v=MW4EWkwC9LM 19 - 2

  19. The Supply Chain Management concept • Barriers to Supply Chain Management • Regulatory and political considerations • Lack of top management commitment • Reluctance to share, or use, relevant information • Incompatible information systems • Incompatible corporate cultures • Globalization 21 - 2

  20. Visser, Logistics: Principles, fig.1.8 cost structure of physical distribution 22 - 2

  21. Source: Van Goor, Ploos van Amstel & Ploos van Amstel, European distribution and supply chain logistics (Groningen 2003), p.63 23 - 2

  22. The Supply Chain Management concept • Supply Chain Management and integration Partnerships, strategic alliances, third-party arrangements and contract logistics • 3 ways of integration: • Vertical integration (e.g. Ford Motor Company) • Formal contracts (e.g. McDonald’s franchise) • Informal agreements 24 - 2

  23. The supply chain and competitive performance Stage one: baseline Material flow Customer service Purchasing Material control Production Sales Distribution 25 - 2

  24. The supply chain and competitive performance Stage two: functional integration Material flow Customer service Materials management Manufacturing management Distribution 26 - 2

  25. The supply chain and competitive performance Stage three: internal integration Material flow Customer service Materials management Manufacturing management Distribution 27 - 2

  26. The supply chain and competitive performance Stage four: external integration Material flow Customer service Suppliers Internal supply chain Customers 28 - 2

  27. Logistics and the Supply Chain (logistical relationships within the firm) • The systems approach “Company’s objectives can be recognized by the mutual interdependence of the major functional area of the firm, such as marketing, production, finance and logistics”. • The total cost approach “Cost trade-offs have to be made”. 29 -2

  28. Logistics and the Supply Chain (logistical relationships within the firm) Source: Van Goor, Ploos van Amstel & Ploos van Amstel, European distribution and supply chain logistics (Groningen 2003), p.66 30 -2

  29. The Supply Chain Management concept • Supply Chain Management and integration • Third-party logistics • Third-party logistics or Logistics outsourcing or Contract logistics • Fourth-party logistics (4PL) or Lead logistics provider (LLP) • Supply Chain software (e.g. ERP) 31 - 2

  30. The trend towards globalization in the Supply Chain Fig. 7.2 The growth in world trade 32 - 2

  31. The trend towards globalization in the Supply Chain leads to: • Focused factories risk: Scale of economy lead to low manufacturing cost but higher logistics costs • Centralization of inventories • Postponement and localization Fig. 7.2 The growth in world trade 33 - 2

  32. Stage 1: Direct export Sourcing Inventory Distribution Sales Manufacturing Country 1 Country 2 Country n 34 - 2

  33. Stage 2: National Warehouses Sourcing Inventory Distribution Sales Manufacturing Country 1 Country 2 Country n 35 - 2

  34. Stage 3: Logistics centralisation Sourcing Distribution Sales Manufacturing Inventory Country 1 Country 2 Country n 36 - 2

  35. Stage 4: Postponed Manufacturing Inventory Sourcing and Primary manufacturing Sales Final manufacturing Distribution Country 1 Country 2 Country n 37 - 2

  36. Comparing forward and reverse logistics Forecasting rel. straightforward One to many distribution points Product quality uniform Product packaging uniform Destination/routing clear Pricing relatively uniform Importance of speed recognised Distribution cost easily visible Negotiations straightforward Process is more transparent Forecasting more difficult Many to one distribution points Product quality not uniform Product packaging often damaged Destination/routing unclear Pricing dependent on many factors Speed often not a priority Reverse cost less directly visible Negotiations difficult Process is less transparent 38 - 2

  37. Next time: Assignment 2 • please split into 4 groups • Choose a product • Draw and explain your supply chain for this product 39 - 2

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