SESSION I

INTRODUCTION TO LOGISTICS AND

SUPPLY CHAIN MANAGEMENT

Lecturer :

DR. NOFRISEL, SE, MM

PROGRAM STUDI MAGISTER MANAJEMEN

UNIVERSITAS INDONESIA

04 SEPTEMBER 2013

AGENDA

Introduction

Operation Management and Competitive Advantage

Concepts of Logitics & Supply Chain Management

Conclusion

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Objective
Identify and explain about how the logistics and SCM
become a strategic concept in recent approach to
sustain competitive advantage (operation
management, SCM & Competitive Advantage)
Explain of the basic concepts of :

Operation management
Supply Chain Management
Competitive Advantage, dan
Logistics

Logistics and SCM in some practices

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HAL 3

INTRODUCTION

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Perception About Logistics & SCM :

2008 & 2009 Global Survey of Supply Chain

HAL 4

*) Source : SCM Review (2008, 2009)

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GLOBAL PROFILE
Logistics is an important industry globally

Source : Accenture (2007)

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Current Issues in Operation Management

Coordinate the relationships between mutually
supportive but separate organizations

Optimizing global supplier, production, and distribution

networks
Increased co-production of goods and services
Managing the customers experience during the service
encounter
Raising the awareness of operations as a significant
competitive weapon

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Competitiveness a new trade pattern

Within country

Internasionalisasi
pasar

Inter country
Country X
Product B1
(Made in Country X)

Product A1 vs Product A2

Country Y
vs

Product B2
(Made in Country Y)

Internationalization of production processes

Global logistics network to support production and marketing
Borderless nation

Saat ini

Inter
Network

Region P
Country 1
Country 2
..
Country N

Product C1

Sumber: Y. Anggadinata, Pusat Studi Logistik dan Rantai Pasok ITB, 2007 (Diolah dari berbagai sumber)

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vs

Product C2

Region Q
Country 1
Country 2
..
Country N

Global Domestics Trade Patterns

Coy C di Negara
ASEAN C
(inventory)

Coy B di Negara
ASEAN B
(inventory)

Coy A di Negara
ASEAN A
(inventory)

Coy Y / Buyer

Indonesia

Coy X / Seller,

Contract

Negara Pemasok
(USA, EU, JPN)

HAL 8

Flow of goods
Shipment
instruction
/Coordination
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Achieving an Integrated Supply Chain

Time

Stage One: Baseline

Customer
service
service

Material flow
Purchasing

Material
Control

Sales

Production

Stage Two: Functional Integration

Customer
service

25%

Material flow
Materials
Management

Manufacturing
Management

Distribution

MRP

Stage Three: Internal Integration

Customer
service

Material flow
Materials
Management

Manufacturing
Management

Distribution

ERP

Stage Four: External Integration

Customer
service

Material flow
Suppliers

Internal Supply
Chain

Customers

Strategic buffer
Source: Stevens (1989)
HAL 9

Distribution

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Conventional and Contemporary Arrangement

of Goods Flow

Conventional

Raw

Manufacturing

Distribution

National

Storage

Materials

Regional

Local

Storage

Distribution

Distribution

Retailers

Customers

Raw Materials & Parts

Contemporary

Raw

Manufacturing

Materials
Material flow (delivery)

Center
Core component

Information flow (order)

HAL 10

Distribution

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Retailers

Customers

Supply Chain Management

HAL 11

OPERATION MANAGEMENT AND COMPETITIVE

ADVANTAGE

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Operations Management is

The systematic design, direction and control of

processes that transform inputs into services and
products for internal, as well as external,
customers.

Inputs

Transformation Processes
(Adding value)

Source : Krajewski (2007)

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Outputs

The Scope of Operations and SCM

Stakeholders
n tier
suppliers

1st tier
suppliers

Distributors

Customers

Operations
Management
Strategic
Sourcing

Logistics
Supply Chain Management

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Quality

Being RIGHT

Speed

Being FAST

Dependability

Flexibility
Cost

Being ON TIME

Being ABLE TO
CHANGE
Being PRODUCTIVE

THE OPERATIONS FUNCTION can provide a competitive advantage

through its performance at the five competitive objectives

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Market Competitiveness

Performance Objectives & Operations Function

Corporated Functional

Corporate Competitive Strategy

Product

Supply Chain

Marketing

Development

or Operations

and Sales

Strategy

Strategy

Strategy

Information Technology Strategy

Finance Strategy
Human Resources Strategy

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The primary drivers for achieving strategic fit in

Supply Chain Strategy

Corporate Strategy

Supply Chain Strategy

Efficiency

Facilities

HAL
HAL 16 16

Responsiveness

Inventory

Transportation

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Information

Market
Segmentation

Competitive and Supply Chain Strategies

Competitive strategy: defines the set of customer needs a firm
seeks to satisfy through its products and services better than its
competitors
Product development strategy: specifies the portfolio of new
products that the company will try to develop
Marketing and sales strategy: specifies how the market will be
segmented and product positioned, priced, and promoted
Supply chain strategy:
Determines the nature of material procurement, transportation of
materials, manufacture of product or creation of service, distribution of
product
Ensuring the consistency and support between supply the companys chain
strategy, competitive strategy, product development strategy, and
marketing strategy
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The zone of strategic fit

(and uncertainty/responsiveness map)

Responsive
Supply Chain

Responsiveness
Spectrum

Key point: The final step in achieving strategic fit is

to match supply chain responsiveness with the
implied uncertainty from demand and supply. All
functional strategies within the supply chain must
also support the supply chains level of
responsiveness

Efficient
Supply Chain

Certain
Demand

Implied
Uncertainty
Spectrum

Source : Chopra & Meindl (2007)

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Uncertain
Demand

HAL 19

LOGISTICS AND SUPPLY CHAIN MANAGEMENT

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SCM Evolution

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What is Supply Chain Management (SCM) ?

SCM

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Supply-chain management is a
total system approach to
managing the entire flow of
information, materials, and
services from raw-material
suppliers through factories and
warehouses to the end
customers
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Supply Chain
Supply chain: The network of services, material, and
information flows that link a firms customer relationship,
order fulfillment, and supplier relationship processes to
those of its supplier and customers.
Supply chain management: Developing a strategy
to organize, control, and motivate the resources involved
in the flow of services and materials within the supply
chain.
Supply chain strategy: Designing a firms supply
chain to meet the competitive priorities of the firms
operations strategy.
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SUPPLY CHAIN STRUCTURE

a network perspective
Upstream
First Tier
Suppliers

First Tier
Customers

Primary

Focal
Firm

BUY SIDE

INSIDE

SUPPLY CHAIN MANAGEMENT

Source: Christopher (1992)

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Second Tier
Customers

End customers

manufacturers

Second Tier
Suppliers

Downstream

SELL SIDE

Supply Chain Stages

(as remains)

suppliers

manufacturer

distributors

supplier

plant
DC

R
R

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supplier

customers

DC
supplier

retailers

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M
E

R
S

Generalized Supply Chain Model

Relationship Management
Information, product, service, financial and knowledge flows
Material Flow
Supplier Network

Information Flow
Integrated
Enterprise

Market
Procurement
Distribution
LOGISTICS

Manufacturing

Capacity, information, core competencies, capital, and human resource

constraints
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End Consumers

Materials
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Distribution
Network

Supply Chain Decisions

TYPE

Strategic
years

Tactical
3 mo.- 1year

Operational
daily

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TYPICAL DECISIONS

Supply chain strategies (Sell direct or through

retailers? Outsource or in-house? Focus on cost or
customer service?)
Supply chain network design (How many plants?
Location and capacities of plants and warehouses?)
Product mix at each plant
Workforce & Production planning
Inventory policies (safety stock level)
Which locations supply which markets
Transportation strategies
Production scheduling
Distribution scheduling and routing
Place inventory replenishment orders
Lead time quotations

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Bullwhip Effect
The magnification of variability in orders in the supply-chain
Retailers Orders

Wholesalers Orders

Time

A lot of retailers
each with little
variability in their
orders.

Time

can lead to greater

variability for a fewer
number of
wholesalers, and

Manufacturers Orders

Time

can lead to even

greater variability for
a single
manufacturer.

So, bullwhip effect is the effect of the lack of synchronization among supply-chain
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Supply Chain for Manufacturing

Raw materials (RM): The inventories needed for
the production of services or goods.
Work-in-process (WIP): Items, such as
components or assemblies, needed to produce a final
product in manufacturing.

Finished goods (FG): The items in manufacturing

plants, warehouses, and retail outlets that are sold to
the firms customers.
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Supply Chain Structure (1)

Customer

Customer

Customer

Distribution
center

Customer

Distribution
center
Manufacturer

Tier 1

Tier 2

Tier 3

Supplier of services
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Supplier of materials

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Supply Chain Structure : a network (2)

Supply-chain is a term that describes how organizations (suppliers, manufacturers,

distributors, and customers) are linked together
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Supply Chain for Services

Supply chain design for a service provider is
driven by the need to provide support for the
essential elements of the various service
packages it delivers.
A service package consists of

HAL 31

supporting facilities
facilitating goods
explicit services
implicit services
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Supply Chain for a Florist

Home
customers

Commercial
customers

Required for facilitating goods

Required for implicit services

Florist

Required for explicit services

Local
delivery
service

Packaging

FedEx
delivery
service

HAL 32

Required for supporting

facilities

Maintenance
services

Arrangement
materials

Flowers
local/
international

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Internet
services

LOGISTICS Vs SCM (1)

Logistics is THE PROCESS of planning,

implementing and controlling the efficient, costeffective flow and storage of raw material, inprocess inventory, finished goods, and related
information from point-of-origin to point-ofconsumption for the purpose of conforming to
customer requirements. (Council of Logistics

Mangement, 1986)

Lambert, 3rd Edition

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LOGISTICS Vs SCM (2)

Logistics 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 pointof-origin to the point-of-consumption in order to
meet customers requirements (Council of
Logistics Management)

Lambert, 4th Edition

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Logistics Activities

Transport
Sources
of Supply

Inbound Logistics

Customers
Transportation
Inventory maintenance
Order processing
Acquisition
Protective packaging
Warehousing
Materials handling
Information maintenance
Supply scheduling

Physical Supply
(material management)

Transportation
Inventory maintenance
Order processing
Product scheduling
Protective packaging
Warehousing
Materials handling
Information maintenance

Physical Distribution

Logistics Business
Source: Ballou (2004)
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Outbound Logistics

Logistics Service Classification *)

(based on the UN Provisional CPC Systems)
Service Classification
Maritime Cargo Handling Services

Storage and Warehousing Services

Freight Transport Agency Services
Other Auxiliary Services
Courier Services
Packaging Services

Custom Clearance Services

International freight transportation (excluding cabotage)
Air freight services
Rail freight services
Road Freight Services
*) Source : AEC Blue Print (2008)
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Logistics Vs Supply Chain Management

a conceptual perspectives

Four Conceptual Perspectives

Logistics

Logistics
SCM

SCM

Traditionalist

Re-labeling

SCM
Logistics

Logistics

Inter-sectionist

Unionist

Soource : Larson & Halldorsson (2004)

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SCM

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CONCLUSION

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Conclusion (1) :
Why SCM is Important?

Tren Global
Increase of global production network (lean production and network)
Influence to go international :
New gain, new customers
Increase economic of scale with lowest cost and price competitiveness
Risk sharing

SCM and Logistics Trends (Hill, 2009)

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Trend of global trade

Implementation of IT
Product design and location
Develpment of outsourcing production (make-or-buy decisions), and
Improving global alliances strategy

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Conclusion (2) :
National Logistics System A SCM Perspective
Government Policy & Regulation
Information Infrastructure & Network

Distributive &
Service

Integrated
System
Procurement

End Consumers

Materials

Macro Level

Supplier
Network

Distribution

Project &
Production System

Transportation Infrastructure & Network

Micro Level

Logistics Provider

Information Flow

Suppliers

Procurement

Project &
Production System

Material Flow

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Distribution

Customer

Conclusion (3) :
SCM : Cost-Responsiveness Efficient Frontier

Responsiveness
High

Managing
Trade-Off

Low

High

Low

*) Source : Chopra & Meindl (2007)

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Cost

Conclusion (4) :
The Essence of Logitics & SCM

Transfer

Transfer

Shipper

Consignee
Transport

Transport

Sea
Port

Dry Port
(ICD)

EMKL

Transport

EMKL

Trans

INDES LINES

Sea
Port

Port to Port
(forwarding service)

Point to Point
(forwarding service)

Door to Door
(forwarding service)
Sumber : Anggadinata (2009)
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Dry Port
(ICD)

EMKL

Transport

EMKL

TERIMAKASIH
nofrisel@yahoo.com

Jakarta 04 September 2013

Dr. Nofrisel, SE, MM

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