Introduction to Logistics and Supply Chain Management

Notes Semester 2, 2015

Table of Contents
Lecture 1 An Overview of Logistics & SCM ............................................... 2
Lecture 2 Demand Management & Order Fulfillment ............................4
Lecture 3 Procurement: Sourcing and BuyingError! Bookmark not defined.
Lecture 4 Production & Operations Management .Error! Bookmark not
defined.
Lecture 5 Inventory Management............. Error! Bookmark not defined.
Lecture 6 Transportation & Freight LogisticsError! Bookmark not defined.
Lecture 7 Warehousing and distribution channels ..Error! Bookmark not
defined.
Lecture 8 Supply chain technologies managing information: ERP, RFID, BI
.......................................................................... Error! Bookmark not defined.
Lecture 9 Supply chain relationships ......... Error! Bookmark not defined.
Lecture 10 Supply Chain Network Design . Error! Bookmark not defined.
Lecture 11 Reverse, Green & Sustainable Supply Chain ManagementError!
Bookmark not defined.
Lecture 12 Current trends and future challenges ....Error! Bookmark not
defined.

 Introduction to Logistics & Supply Chain Management Semester 2, 2015
Lecture 1 An Overview of Logistics & SCM
Major external forces
Globalisation
Technology
Organisational consolidation
Empowered consumer
Government policy and regulation

Origins of supply chain management

1950s & 1960s
- Mass production techniques used as principle cost reduction and productivity
improvement strategies
1960s & 1970s
- Development of Materials Requirements Planning (MRP) and Manufacturing Resource
Planning (MRPII) to coordinate inventory management and improve internal
communication
1980s & 1990s
- Intense global competition lead manufacturers to adopt:
Supply Chain Management (SCM)
Just-In-Time (JIT)
Total Quality Management (TQM)
Business Process Reengineering (BPR)
2000s and beyond
- Companies will focus on relationships, sustainability, and social responsibility
- Companies will focus on improving supply chain capabilities with initiatives such as:
Third-party service providers (3PLs)
Integrating logistics
Using transportation to facilitate rapid response

Definitions of supply chain management

Institute for supply management
- The design and management of seamless, value-added processes across
organisational boundaries to meet the real needs of the end customer
Logistics and supply chain management society
- The coordinated set of techniques to plan and execute all steps in the global network
used to acquire raw materials from vendors, transform them into finished goods, and
deliver both goods and services to customers
Council of supply chain management professionals
- The planning and management of all activities involved in sourcing and procurement,
conversion, and all logistics management activitiesalso includes coordination with
channel partners, which can be suppliers, intermediaries, third party service providers,
and customers

Supply chain management An integrated approach

SCM is the art and science of integrating the flows of products, information and financials through
the entire supply pipeline from the suppliers supplier to the customers customer.
 Introduction to Logistics & Supply Chain Management Semester 2, 2015

Effective SCM 7 Rs
Right product
Right quantity
Right condition
Right place
Right time
Right customer
Right cost

Key foundations for effective SCM

Supply Supply base rationalisation, supplier
alliances, SRM, global sourcing, ethics
and sustainability
Operations Demand management, CPFR, MRP, ERP,
inventory visibility, lean systems, six sigma
quality systems
Logistics Logistics management, customer
relationship management, network
design, RFID, global supply chains,
sustainability, service response logistics
Integrations Risk and security management,
performance measurement, green
supply chains
Important elements of supply chain management
Supply elements:
- Supplier management improve performance through:
Supplier evaluation (determining supplier capabilities)
Supplier certification (third party or internal certification to assure product quality
and service requirements)
- Strategic partnerships
Successful and trusting relationships with top-performing suppliers
- Ethics and sustainability
Recognising suppliers impact on reputation and carbon footprint
Operation trends:
- Demand management match demand to available capacity
- Linking buyers & suppliers via MRP and ERP systems
- Use lean systems to improve the flow of materials to reduce inventory levels
- Employ six sigma to improve quality compliance among suppliers
Logistics trends:
 Introduction to Logistics & Supply Chain Management Semester 2, 2015
- Transportation management
Tradeoff decisions between cost & timing of delivering/customer service via
trucks, rail, water & air
- Customer relationship management
Strategies to ensure deliveries, resolve complaints, improve communications, &
determine service requirements
- Network design
Creating distribution networks based on tradeoff decisions between cost &
sophistication of distribution system
Integration trends:
- Supply chain process integration
When supply chain participants work for common goals
Requires intra-firm functional integration
Based on efforts to change attitudes & adversarial relationships
- Supply chain performance management
Crucial for firms to know if procedures are working

Other major issues for consideration

Supply chain networks
- The networks facilities and supporting transportation is important
- Increased complexity for organisations is a problem
- Inventory deployments
Inventory duplication
The bullwhip effect
- Collection and storage of vast amount of data
- Cost/value
Efficiency (cost) and effectiveness (value) prevention of sub-optimisation
- Organisational relationships
Tradeoffs and optimisation
- Performance measurement
Technology
- Challenge is to evaluate and successfully implement the technology
Transportation management
- 7 Rs
Supply chain security
- Concern and potential challenge since 9/11
Expanding the supply chain
- Firms are expanding partnerships and building facilities in foreign markets
Increasing supply chain responsiveness
- Firms will increasingly need to be more flexible and responsive to customer needs
- Supply chain will need to benchmark industry performance and meet and improve on
a continuous basis
- Responsiveness improvement will come from more effective and faster product &
service delivery systems
The GREENING of supply chains
- Producing, packing, moving, storing, delivering and other supply chain activities can be
harmful to the environment

Lecture 2 Demand Management & Order Fulfillment

Demand management
The ability of firms throughout the supply chain to collaborate on activities related to the flow of
product, services, information, and capital.
Problems in achieving goal:
Lack of coordination between departments
 Introduction to Logistics & Supply Chain Management Semester 2, 2015
Too much emphasis on forecasts of demand, with less attention on the collaborative efforts
and the strategic and operational plans
Demand information is used more for tactical and operational than for strategic purposes

Demand forecasting
A forecast is an estimate of future demand & provides the basis for planning decisions
- The goal is to minimize forecast error
- The factors that influence demand must be considered when forecasting
- Managing demand requires timely & accurate forecasts
- Good forecasting provides reduced inventories, costs & stock-outs, and improved
production plans & customer service
Traditional forecasting
- Determine the amount of product that will be purchased, when it will be purchased
and where it will be purchased
- Various statistical techniques exist for forecasting
Forecasts are necessary
- Serve as a plan for both marketing and operations to set goals and develop execution
plans

Types of demand
Independent demand
- Demand for a primary item
- Also known as base demand
Dependent demand
- Directly influenced by demand for the independent item

Factors affecting demand

Random variations (eg. outbreak of epidemics)
Trends (eg. latest fashion wear)
Seasonal patterns (eg. festive seasions)
Business cycles (eg. end of financial year)

Types of forecasting techniques

Qualitative forecasting methods
- Generally used when data are limited, unavailable, or not currently relevant. Forecast
depends on skill & experience of forecaster(s) & available information
Quantitative methods