Intro To Scm Lecture 1-c

Planning & Coordination Flows

SUPPLY CHAIN MANAGEMENT Lecture 1-C Logistics/SC Competency

Logistics/SC Competency

First Step: Superior Network Design









Network Design Information Transportation Inventory Warehousing, material handling, and Packaging

Information Technology for collecting sophisticated information is available.
Deficiency in information collection or processing can cause innumerable problems.
Forecasting and order management depend on information
Order management information is required both for external and internal use.









Logistics/SC facility typically include manufacturing plant, warehouses, cross-dock operations, outsourced facilities and retail stores All logistical facilities must be managed as a part of company’s logistical/SC network. The design network including information and transportation also handles customer orders, maintains inventory and materials. Network design needs to be modified to accommodate changes in demand and supply, product mix, supplier’s supplies and manufacturing requirements.

Transportation Geographically positions the Inventory Private, contract or common carriage are possible modes of transportation
Factors need to be considered in Transportation: - Cost & Speed of transportation - Consistency of Transportation



Warehousing, material handling, and packaging

Inventory The objective is to achieve customer service with minimum inventory commitment for lowest total cost
Excessive inventories compensate problems in network design but at the cost of increased logistics cost
The best practice of inventory management is to achieve maximum turnover while satisfying customer requirements.


Integrated Logistics/SC


Integral part of other logistical areas Warehousing needed for efficient distribution, stockpiling etc
Warehouse activities may include sorting, sequencing, order selection, transportation and re-packaging
Master cartons, pallets, mechanized and automated devices help in material handling



Inventory Flow

It is the competency that links the company with its customers and suppliers. The entire operation can be divided into two main categories: - Information Flow




The logistics/SC operation starts with initial shipment of materials from a supplier and ends with the manufactured or 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 manufacturing plans. The products and materials procured are used to move the value added inventory, flow takes place to ultimately result in transfer of product to the consumer.

Inventory Management Policy









Transportation Integration

Procurement

Customer Segmentation

Time-based requirements

Product Requirements In most cases, there is substantial difference in volume 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 highly profitable items.

Inventory Management Policy Selective Deployment

Product Requirement




Manufacturing Support

More weightage to highly profitable and customers with growth potential. Inventory needs to be focused on highly profitable customers (part of segmented logistics)

Customer Segmentation Product Requirement Transportation Integration Time Based Requirement Competitive Performance

Customer Segmentation

Physical Distribution


Competitive performance

Transport Integration Regional warehousing saves transportations which may offset the cost of holding inventory




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




Information Flow


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

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 & Coordination Flows

Planning & Coordination Flows

Operational Flows Order management
Order Processing
Distribution Operations
Inventory management
Manufacturing requirements
Transportation & shipping
Procurement


Strategic objectives
Capacity constraints
Logistical requirements
Inventory deployment
Manufacturing requirements
Procurement requirements
Forecasting


Course Outline         

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

Operational Flows

2 1 1 2 1 1 1 1 3 3 2

1. What is logistics/SC management? 2. What are the sources of competitive advantage in logistics/SC? 3. What are the implications of supply chain management in logistics? 4. Explain the concept of value advantage. How value advantage can be achieved through customer service and production activities? 5. How logistics and customer service affect marketing? 6. Explain various types of flows incorporated in integrated logistics? 7. What factors impact inventory management policy?




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