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Presented by: DEEPTI

• Science of managing (controlling) the movement and storage of goods (or people) from acquisition to consumption. • Goods: Raw Materials  Final products, and everything in between. • Movement = Transportation (between locations). • Storage = Inventory, Warehousing (at

Definition by Council of Logistics Management, 1998
• ….is that part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point-oforigin to the point-of-consumption in order to meet customers' requirements.

Logistics – Mission [A Bill of “Rights”]
• Logistics embodies the effort to deliver:
– the right product – in the right quantity – in the right condition – to the right place – at the right time – for the right customer – at the right cost

Activities and Logistics Decisions
rate and contract negotiation mode and service selection routing and scheduling finished goods policies supply scheduling short term forecasting private vs. public space determination warehouse configuration stock placement




Facility Location determining location, number and size of facilities allocating demand to facilities Customer Service – determining customer wants – determining customer response to service changes Materials Handling – equipment selection – equipment replacement – order picking procedures Packaging design Order Processing – order procedure determination Production Scheduling



• • •

Components of logistics management : Planning
Inputs into logistics

Management actions Implementation Control

Outputs of logistics

Natural resources (land, facilities, and equipments) Human resources

Logistics management Suppliers Raw In-process materials inventory Finished goods

Marketing orientation (competitive advantage) Time and place utility Efficient movement to customer Proprietary asset

Logistics Activities Financial resources Information resources

The Logistics (Strategic) Planning Triangle

Strategy/Control system? How much? Where?

Which mode? Which carrier? Which route? Shipment size and frequency?

Where?, How many? What size? Allocation?

What is a supply chain?
• Raw materials • Suppliers • Manufacturers

• Warehouses • DCs • Retail outlets

Cycle View of Supply Chains
Customer Order Cycle Replenishment Cycle

Custome r Retaile r Distributo r Manufacture r Supplie r

Manufacturing Cycle Procurement Cycle

The Supply Chain
Supplie rs Manufacture rs Warehouses & Distribution Centers Custome rs

Material Costs

Transportati on Costs Manufacturing Costs

Transportati on Costs

Inventory Costs

Transportati on Costs

What is SCM?
• The efficient integration of suppliers, factories, warehouses and stores so that merchandise is produced and distributed
– in the right quantities – to the right locations – at the right time

Why Is SCM Difficult?
• Uncertainty is inherent to every supply chain
– – – – Travel times Breakdowns of machines and vehicles Weather, natural catastrophe, war Local politics, labor conditions, border issues

• The complexity of the problem to globally optimize a supply chain is significant
– – Minimize internal costs Minimize uncertainty

Supply Chain Management – Key Issues

Source: Simchi-

Supply Chain Management – Benefits
• A 1997 PRTM Integrated Supply Chain Benchmarking Survey of 331 firms found significant benefits to integrating the supply chain

Source: Cohen & Roussel

The Value Chain: Linking Supply Chain and Business
Business Strategy
New Product Marketin Strategy g Strategy

Supply Chain Strategy

Finance, Accounting, Information Technology, Human Resources

Flows in a Supply Chain
Informatio n Product Funds
Supply Chain


“Supply Chain Management” is Much More
“Demand Management”
Demand Planning

“Focal Firm”

“Supply Management”

Procurement Operations (Product or Service) Strategy

Outbound Logistics Customer Relationship Management Sales Order Mgt.

Inbound Logistics Supplier Relationship Management

Process Design and Management Project Management Financial Resource Management Supply Chain Integration


Source: John Langley,Ph.D, Georgia Tech, 2002. Source: C. John Langley, Jr., Jr., Ph.D., Georgia Tech


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