LOGISTICS AND SUPPLY CHAIN

MANAGEMENT
LSCM

Logistics Introduction

Logistics is the science of efficient flow of materials.

It ensures that materials and products are at the right
place at the right time to create place and time utility.
It enables profits through lowering and reducing
inventory costs.

Definitions

LM is that part of SCM that plans, implements

and controls the efficient, effective forward and
reverse flow and storage of goods, services, and
related information between point of origin and
the point of consumption in order to meet
customers requirements.
It includes inbound and outbound transportation
management, warehousing, materials
management of third party logistics service
providers

Definition of SCM

SCM encompasses planning and management of all

activities involved in sourcing and procurement,
conversion and all logistics management activities.
It also includes coordination and collaboration with
channel partners, which can be suppliers,
intermediaries, third party service providers and
customers.

Council of supply chain management

Logistics as a system

The sub system under logistics system are

Distribution system
Production system
Material system

Logistics system

Supplier
system

Coordination

Material supply

Coordination

Control

Coordination

Control

Raw Internal
material transport
stock

Material flow

Production

Customer
system

Buffer

Stock

Work Finished
In
goods
Progress stock

Operation

Distribution

Coordination

Control

External Ware- External

transport house transport

Movement

Logistics system and supply chain

Logistics system not only limits to the flows of

materials, components and products but also
includes supply chain flows of spare parts and return
flows of defective and used products and packaging.
It includes direct suppliers and customers.

Goals and performances of logistics

Competitiveness: from within and outside

High performance: revenue, costs, assets and
environment.
Efficiency and effectiveness
Profitability
Environment friendly manner
Variables like time and flexibility are important
variables.

Performance Variable

Customer service: good delivery service, supplying

information on material flows.
Costs: handling, inventory, operation and
depreciation.
Tied up capital: fixed and current assets
Flexibility: delivery, product mix and volume
Time: time to customer, time to market

Conflicting goals in logistics

A majority of performance variables are, in fact,

conflicting. As a result of these inverse
relationships, certain priorities must normally be
assigned to the variables.
In order to create competitiveness for the
company it is also essential that the right type of
logistics solutions is performed and the right
performance variables are given priority, i.e. the
efficiency is turned into effectiveness

Conflicting goals in logistics

Performance based on trade off

Example customer satisfaction depends on large
inventory but increases tied up capital.
To achieve a best overall performance, it is important
that there is trade off between several variables
There is not only goal conflicts between
performance variables but also between companys
different departments