Business Logistics/Supply

ChainA Vital Subject

The supply chain is simply another way of

saying the whole process of business.

Chapter 1
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 The Immediate Supply Chain for an Individual Firm

Transportation Transportation Customers

Warehousing

Information
flows
Factory

Transportation

Vendors/plants/ports
Warehousing Transportation

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 Logistics Defined
Logistics is the process of planning, implementing and
controlling the efficient, cost-effective flow and storage
of raw materials, in-process inventory, finished goods
and related information from the point of origin to point
of consumption for the purpose of conforming to
customer requirements.
Council of Logistics Management

Supply Chain Management Defined

SCM is the integration of all activities associated with the
flow and transformation of goods from raw materials
through to end user, as well as information flows, through
improved supply chain relationships, to achieve a
sustainable competitive advantage.
Handfield and Nichols
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Evolution of Supply Chain Management
Activity fragmentation to 1960 Activity Integration 1960 to 2000 2000+

Demand forecasting

Purchasing

Requirements planning
Purchasing/
Production planning Materials
Management
Manufacturing inventory

Warehousing
Logistics
Material handling

Packaging

Finished goods inventory Supply Chain

Physical Supply Chain
Management
Distribution Management
Distribution planning

Order processing

Transportation

Customer service

Strategic planning

Information services

Marketing/sales

Finance
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 Supply Chain Schematic

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 The Logistics/SC Mission

Getting the right goods or services

to the right place, at the right time,
and in the desired condition at the
lowest cost and highest return on
investment.

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A Revised Strategy is Generating
Great Top Management Interest
Historical perspective of distribution:
The last frontier of cost economies
Peter Drucker, 1962
The contemporary view:
Distribution is a new frontier for demand
generationa competitive weapon.

Both views are

now important!
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 Critical Customer Service
Loop
Customer order processing (and
transmittal)

Transportation
Customers

Inventory
or supply source

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Costs are lower than K-Mart or
Target Stores
CEO is a former logistician
Wal-Mart is the largest retailer in
the world!
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Scope of the Supply Chain for Most Firms
Business logistics

Physical supply Physical distribution

(Materials management)

Sources of Plants/
Customers
supply operations
Transportation Transportation
Inventory maintenance Inventory maintenance
Order processing Order processing
Acquisition Product scheduling
Protective packaging Protective packaging
Warehousing Warehousing
Materials handling Materials handling
Information maintenance Information maintenance

Focus firms internal supply chain 1-14

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