Planning & Coordination Flows

SUPPLY CHAIN
MANAGEMENT
Lecture 1-C
Logistics/SC Competency

Logistics/SC Competency First Step: Superior Network Design

Logistics/SC facility typically include

Network Design manufacturing plant, warehouses, cross-dock
operations, outsourced facilities and retail stores

Information
All logistical facilities must be managed as a
part of company’s logistical/SC network.

Transportation
The design network including information and
transportation also handles customer orders,

Inventory maintains inventory and materials.

Warehousing, material handling,
Network design needs to be modified to
accommodate changes in demand and supply,
and Packaging product mix, supplier’s supplies and
manufacturing requirements.

Information

Technology for collecting sophisticated
information is available.

Deficiency in information collection or
processing can cause innumerable
problems.
Transportation

Geographically positions the Inventory

Private, contract or common carriage are
possible modes of transportation

Factors need to be considered in

Forecasting and order management

Transportation:
depend on information - Cost & Speed of transportation

Order management information is required - Consistency of Transportation
both for external and internal use.
 Warehousing, material handling, and
Inventory
packaging

The objective is to achieve customer
Integral part of other logistical areas
service with minimum inventory
commitment for lowest total cost
Warehousing needed for efficient

Excessive inventories compensate distribution, stockpiling etc
problems in network design but at the cost
Warehouse activities may include sorting,
of increased logistics cost sequencing, order selection, transportation

The best practice of inventory and re-packaging
management is to achieve maximum
Master cartons, pallets, mechanized and
turnover while satisfying customer automated devices help in material
requirements.
handling

Integrated Logistics/SC Inventory Flow

It is the competency that links the company with
its customers and suppliers. The entire
The logistics/SC operation starts with
operation can be divided into two main initial shipment of materials from a supplier
categories: and ends with the manufactured or
- Information Flow processed product to a customer.
Information from and about customers flows in the form of
sales activity, orders and forecasts. Inventory Flow

- Inventory Flow
The information flow is used for purchasing and
Physical Manufacturing
manufacturing plans. The products and materials procured Distribution Support
Procurement
are used to move the value added inventory, flow takes place
to ultimately result in transfer of product to the consumer.

Inventory Management Policy
Customer Segmentation

More weightage to highly profitable and customers with

Customer Segmentation growth potential. Inventory needs to be focused on

Product Requirement highly profitable customers (part of segmented logistics)

Transportation Integration
Product Requirements

Time Based Requirement In most cases, there is substantial difference in volume

Competitive Performance and profitability across product lines. Selective inventory
policy demands more importance to be given to product
line profitability. An enterprise takes more care of its
Inventory Management Policy highly profitable items.
Selective Deployment

Transport Integration
Regional warehousing saves transportations which may
Customer Product Transportation Time-based Competitive offset the cost of holding inventory
Segmentation Requirement Integration requirements performance

Time based requirements
Produce and supply products when required to save on
inventory costs. In cases when the raw materials and
products can be delivered quickly, safety stock can be
reduced for lower inventory costs

Competitive Performance
Inventories need to be analyzed with competitors in
mind. Unnecessarily higher inventories make a company
uncompetitive. Analyze!
Information Flow

Information flow integrates the three
operating areas of inventory flow and
parallel the actual work performed in the
three operating areas of inventory flow.
The main component are:
Information Flow

Planning &
Operational Flows
Coordination Flows

Planning & Coordination Operational Flows

Flows

Order management

Strategic objectives

Order Processing

Capacity constraints

Distribution Operations

Logistical requirements

Inventory management

Inventory deployment

Manufacturing requirements

Manufacturing requirements

Transportation & shipping

Procurement requirements

Procurement

Forecasting

Course Outline 1. What is logistics/SC management?

 Introduction to Supply Chain Management
 Location Logistics
 Partnerships/ Third Party Logistics
 Inventory Management & Control
 Warehousing
 Transportation Logistics
 Marketing Channels/Distribution
 Purchasing
 Manufacturing
 Production Planning
 JIT & Lean Manufacturing
 Operations Scheduling
 Planning
 Enterprise Resource Planning
 Material Requirement Planning
 Material Requirement Planning
 Supply Chain Performance Measurement & Evaluations
2 2. What are the sources of competitive advantage
1
in logistics/SC?
1
3. What are the implications of supply chain
management in logistics?
2
1
4. Explain the concept of value advantage. How
value advantage can be achieved through
1 customer service and production activities?
1 5. How logistics and customer service affect
1 marketing?
3 6. Explain various types of flows incorporated in
3 integrated logistics?
2 7. What factors impact inventory management
policy?
 Reference:

Logistics Management by Satish C.
Ailwadi and R. Singh, Prentice Hall of
India, 2005