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Part 1 – Introduction
• Chapter 1 – Logistics and the Supply Chain
• Part 1 – Introduction to Logistics
• Part 2 – Competing Through Logistics
• Chapter 2 – Serving the Customer
• Chapter 3 – Value and Logistics Cost
Part 2 – Leveraging Logistics Operations
• Chapter 4 – Managing Logistics internationally
• Chapter 5 – Managing the Lead-time Frontier
• Chapter 6 – Just – in – Time and Lean Thinking
• Chapter 7 – The Agile Supply Chain
Part 3 – Supplier Interfaces
• Chapter 8 – Managing the Supply Chain
• Chapter 9 – Partnerships in the Supply Chain
Part 4 – Changing the Future
• Chapter 10 – Logistics Future Challenges
Logistics and the Supply Chain
(Part 1)
Chapter 1
Chapter Objectives
After this chapter you should be able to:
1. Understand how supply chains are
structured
2. Understand different ways in which supply
chains may choose to compete in the
marketplace
3. Understand the need to align supply chain
capabilities with the needs of the end
customer
Fact and FAQ
A car takes only 17 hours to assemble and a
couple more days to ship to the customer via the
dealers.
MATERIAL FLOW
THE
COMPANY
SUPPLY DEMAND
SIDE SIDE
INFORMATION FLOW
Supply Chain Performance
Objectives
1.Quality
2.Flexibility
3.Dependability
4.Speed
5.Cost
Essential Points in Supply Chain
Management
SCM views the supply chain as a
single entity
It demands strategic decision-making
It views balancing inventories as a last
resort
It demands system integration
Logistics and the Supply Chain
• Questions:
• How is a supply chain structured?
• What is the purpose of a supply chain?
Factories Factories
4 routes
inwards
Wholesalers
32 routes
Outwards
8 routes
Outwards
Customers Customers
Activities in a Supply Chain
Upstream Activities Downstream Activities
Initial 3rd tier 2nd tier 1st tier 1st tier 2nd tier 3rd tier Final
Supplier Supplier Supplier Supplier customer customer customer customer
Organization
Supply Chain Structure & Tiering
3rd tier 2nd tier 1st tier 3rd tier 2nd tier 3rd tier
supplier supplier supplier customers customers customers
Organization
Supply Chain Structure & Tiering
Raw Materials
Supplier
Manufacturer
Supplier NDC
Organizations RDC
Organizations
Back Store
p. 13
Key Logistics Processes at Tesco
Order
Processing
Customer Service
Facility Demand Forecasting
Inventory
Network Communications
Procurement
Reverse Logistics
Parts & Service
W”housing,
Support Traffic &
Mat’ls
Transportati
Handling &
on
Packaging
Logistics
Logistics is the process of planning, implementing and
controlling the efficient, cost-effective flow and storage
of raw materials, in-process inventory, finished goods
and related information from point of origin to point of
consumption for the purposes of conforming to
customer requirements.
Logistics Process
Supply Points
Materials
Management
Production
Facilities
Logistics
Distribution
Facilities Distribution
Demand Points
Why is Logistics Important
• Material Flow
• Information Flow
What is Material Flow
Material flows from primary manufacture through various
stages of the network to the end customer.
Material flow represents the supply of product through the
network in response to demand from the next
(succeeding) organization.
What is Information Flow
Rigid Flexible
Note: WIP = Work in progress, i.e. products being worked on but not yet ready for sale. Shaded areas indicated days of stock.
The wider the area, the more days of stock in that position.
Realization on Xerox inventory profile
• The impact of the new build philosophies on the
downstream supply chain processes can be summarized
as follows:
• While the traditional inventory profile shows a maximum
number of days of stock at finished product level, this is
risky. It always seems that demand is greatest for the
very items that are not available.
• Postponing the decision on exact specification until as
late as possible in the process helps create the much
flattened inventory profile to the right of the diagram.
Upstream and Downstream Activities
Alignment
It is the alignment of upstream and downstream
capabilities of supply chain partners to deliver
superior value to end customers at less cost to
the supply chain as a whole
End Of Presentation
Isoquant Curves
In economics, an isoquant is a contour line drawn through
the set of points at which the same quantity of output is
produced while changing the quantities of two or more
inputs.
Isoquant mapping deals with the cost-minimization problem
of producers.
Isoquants are typically drawn on capital – labor graphs,
showing the technological tradeoff between capital and labor
in the production function, and the decreasing marginal
returns of both inputs. Adding one input while holding the
other constant eventually leads to decreasing marginal
output, and this is reflected in the shape of the isoquant.