Introducing Logistics &

Supply Chain Management

Compiled by Rulzion Rattray

Logistics (Christopher, M. 1998)

Logistics is the process of strategically
managing the procurement, movement and
storage of materials, parts and finishing
inventory (and the related flows of
information) through the organisation and
its marketing channel in such a way that
current & future profitability are
maximised through the cost-effective
fulfilment of orders.

The Resource Environment

The Value Chain Michael Porter (1985)
Firms Infrastructure
Technology Development

n
gi
ar
M

Human Resource Management

Secondary
Activities

Procurement

Logistics

Operations

Outbound
Logistics

Marketing Service
& Sales

Primary Activities

M
a
r
gi
n

Inbound

Resource Environment
The Value Chain Michael Porter (1985)

Firms Value
chain

Supplier
value
chains

Channel
value
chains

Customer
value
chains

Supply Chain Management

The management of upstream and
downstream relationships with suppliers &
customers to deliver superior customer
value at less cost to the supply chain as a
whole. (Christopher, M. 1998)
A network of connected & interdependent
organisations mutually & cooperatively
working together to control, manage and
improve the flow of materials and
information from suppliers to end users.
(Aitken, J., 1998)

Mission of Logistics Management

Scope of logistics spans the organisation
Material Flow

Suppliers

Procurement

Operations

Distribution

Customers

Requirements Flow

Means by which customers are satisfied

through coordination of material &
information flow

Supply Chain and Performance

Supply chain is the network of
organisations that are involved through
upstream or downstream linkages.
Traditionally most organisations see
themselves as separate entities
Traditionally Logistics management has
been concerned with flow within the
organisation.

Achieving an Integrated Supply Chain

Stage 1

Material Flow
Purchasing

Material
Control

Customer Service
Production

Sales

Stage 2

Material Flow
Material
management

Customer Service

Manufacturing
management

Distribution

Stage 3

Material Flow
Material
management

Customer Service

Manufacturing Distribution
management

Stage 4

Material Flow
Suppliers

Distribution

Internal
Supply chain

Customer Service
Customers

Increasing Complexity
At the end of the second world war there was a
global shortage of manufactured goods.
Today At the beginning of the third millennium
there is an oversupply.
Firms shop freely amongst the nations
In 1991, for the first time, companies spent
more money on computing and
communications gear than the combined
moneys spent on industrial, mining, farm, and
construction equipment.

Organisational Integration
Increasing requirement of integration will
require generalists who can manage
processes.
Knowledge of systems theory and systems
thinking will be a requirement for these
generalist mangers.
We are entering an era of supply chain
competition

Rules of Competition
Competitive advantage achieved by a
combination of product excellence and
process excellence.
Responsiveness and agility
Reliability in logistics this will require
enhanced pipeline visibility
Relationships trend towards customers
seeking to reduce supplier base?

References
Aitken, J., Supply Chain Integration within the Context of a
Supplier Association, Cranfield University PHD Thesis, 1998.
Cited in Christopher, M., (1998), Logistics and Supply Chain
Management. Strategies for Reducing Cost and Improving
Service, Financial Times Pitman Publishing, London.
Christopher, M., (1998), Logistics and Supply Chain
Management. Strategies for Reducing Cost and Improving
Service, Financial Times Pitman Publishing, London
Porter ME 1979, How Competitive Forces Shape Strategy,
Harvard. Business Review March/April 1979.
Porter ME 1985, Creating & Sustaining Superior Performance,
Free Press.