Digital firm U1611011 U1611020 U1611023 U1611024

1. What is the Difference Between Logistics and Supply Chain Management?

The difference between logistics and supply chain management is as below:

"Logistics typically refers to activities that occur within the boundaries of a single organization and
supply chains refer to networks of companies that work together and coordinate their actions to
deliver a product to market. Also, traditional logistics focuses its attention on activities such as
procurement, distribution, maintenance, and inventory management. Supply Chain Management
(SCM) acknowledges all of traditional logistics and also includes activities such as marketing, new
product development, finance, and customer service"

2. What is Logistics?
We will dig deeper to see more simple meaning of logistics as below,
"Logistics is about getting the right product, to the right customer, in the right quantity, in the right
condition, at the right place, at the right time, and at the right cost (the seven Rs of Logistics)"

3. What is Logistics Management?

We will also explore more deeply about logistics management as below,

"Logistics Management deals with efficient and effective management of day-to-day activity in
producing the company’' s finished goods and services"

What is Supply Chain Management?

Each researcher defines supply chain management differently. However, we would like to provide the
simple supply chain management definition as below,

"Supply chain management (SCM) refers to the coordination of production, inventory, location, and
transportation among the participants in a supply chain to achieve the best mix of responsiveness
and efficiency for the market being served"
Evaluate the various key components of logistics and the various issues or challenges facing the logistics
manager and how coordination or integration within the logistics chain and logistics function with other
functions within the firm can be achieved.

Key components of Logistics – Key activities

The logistics activities can be classified into a) core and b) supporting
The core activities take place in every supply channel (as can be seen from the figure).
They contribute the most to the total cost of logistics or they are essential to the effective coordination and
completion of the logistics task.
These are mentioned below: 1. Customer service (typically defined by marketing) 2. Transportation 3. Inventory
management 4. Information flows and order processing
Key components of Logistics – Support activities
Support activities vary from company to company
A comprehensive list includes:
1. Warehousing (Space determination, stock layout, configuration, stock placement)
2. Materials handling ( equipment selection & replacement policies, order-picking procedures, stock storage &
retrieval)
3. Purchasing (supply source selection, purchase timing, purchase quantities)
4. Protective packaging (designed for handling, storage, protection from loss/damage)
5. Cooperate with production/operations (specify aggregate quantities, sequence & time production output,
schedule supplies)
6. Information maintenance (info collection, storage & manipulation, data analysis, control procedures)
Logistics decision hierarchy: Critical Questions

1. Strategic

Warehousing - How many? Where to place? Management? Owned or rented? Size?

Storage – Material Handling - Raw materials policy? Ready materials policy?

Technology - Automation level?

Transportation - Warehouse replenishment/ transportation? Distribution to clients?

2. Tactical / Planning

Warehousing - Rent or buy? Location? Capacity? Arrangement? Equipment?

Storage – Material Handling - Size of pallets?

Transportation - Buy or rent vehicles? Fleet, mix, size? Delivery vehicles, size?

3. Operations

Warehousing - Personnel? Working hours, shifts, overtime?

Storage – Material Handling - Products for stock? - Desired amount of stock? Order policy? Which supplier? Order
picking & control?

Transportation - What type of vehicles should be used? Service region of each vehicle? Routes of vehicles?
Maintenance of vehicles?

How coordination or integration within the logistics chain and logistics function with other functions within
the firm can be achieved?
Integration of logistics and e-business is the future trend. In order to get more advantageous position and build a
complementary and dependent relationship, networking industries, such as Yahoo and e-Bay, usually cooperate with
logistics industries. The integration could reduce the middle-level procedures. The producers could immediately give
the products over to the terminal customers. This could reduce expenses and also administer sources more
efficiently. Companies do not have to take the costs of inventory and warehouse, and therefore they become
modernized industries of low cost, more efficiency and division of specialty. For example, customers could get
ordered goods from convenience stores. Through e-logistics, the competition condition of industries could be
promoted in knowledge economics. The integration and promotion of business activities have to involve
transportation systems at various stages. The integration of various applications brings the convenience through
promoting the system of information flow and business operations. Customers and firms could make business more
efficient and easier through the help of e-commerce and the Internet. However physical delivery still relies on the
transportation system to finish the operations. The cost of transportation operation may be one-third of logistics
costs. Meanwhile, transportation systems and techniques are 9 needed in almost every logistics activity. Thus the
reform of business patterns has to consider transportation systems.

Making Trade-offs in Logistics is Important

Logistics interfere with many business areas and, thus, it is suggested to identify and determine several “cost trade-
offs” in order to provide a positive benefit to the logistics system as a whole.

Four (4) different levels of trade-off are proposed:

Within distribution components, e.g. the decision to use random storage locations compared to fixed storage
locations in a depot. The first better storage utilization, more difficult for picking; the second has the opposite
results.

Between distribution components: e.g. a company might increase the strength and thus the cost of packaging but
find greater savings through improvements in the warehousing and storage of the product

Between company functions: e.g. a trade-off between optimizing production run lengths and the associated
warehousing costs of storing the finished product. Long production runs produce lower unit costs (and thus more
cost-effective production) but mean that more product must be stored for a longer period (which is less cost-
effective for warehousing).

Between the company and external organizations: e.g. a change from a manufacturer’s products being delivered
direct to a retailer’s stores to delivery via the retailer’s depot network might lead to mutual savings for the two
companies.