Logistics Processes and

Practices
Ms. Sebonkile Thaba
Units outcome

• Discuss the Basic Definitions, Issues, and Challenges in logistics

practices and processes
• Differentiate between Logistics and Operations Management
• Discuss the Synchronisation between Supply and Demand, and the
Role of Inventories
• Explain the Role of Planning and Control and the SCOR Model in
logistics processes and practices
Logistics, operations and supply chain
management
• The chapter given an overview of logistics, operations and supply chain management.
• All the 3 terms deals with management of systems
• Determines the performance of the company or companies
• The corresponding planning and control of daily business operations
• In SME daily operations are handled by human beings :
• intuition and experience finding creative solutions
• People with unique operations management abilities
• fill in blanks react flexibly
• Frequent and rapid complex processes
• Intuition alone cannot suffice and experience can misleading
• Supply chain becomes more complex: many people involved in the process both simultaneously and in sequence
• Differ in experiences, knowledge and intuition
• Integral logistics management
Questions

• Which management systems within a companies determines the

performance of a company or among companies as well as the
corresponding planning and control of daily business operations
A. Operations management
B. Logistics management
C. Supply Chain Management
D. Supply chain and Logistics Management
E. Operations, Logistics and Supply Chain Management
Unit 1: Basic Definitions, Issues, and
Challenges of logistics practices and processes

• In overview on definitions, challenges and issues

• The key focus on the definition are places on logistics, supply
chain management, and operations management
• With the aim of showing the interrelationships of OPS
Management, SCM and logistics
Basic Definitions, Issues, and Challenges in
logistics practices and processes

• Three reasons we need definition:

• Transmit a picture of the phenomena
• Clear up misunderstandings
• Definitions are essential for structural presentation in a textbook that
covers all topics in substantial detail
• It is important to learn and understand definitions,
• However, definitions should not discourage the learning of new concepts
• Unit 1 discussing the issues and challenges connected with the concept and
term defined.
Basic Definitions, Issues, and Challenges in
logistics practices and processes

• When dealing with logistics management it is important to have clear

understanding of operations management and supply chain
management.
• The unclear boundaries that occurs in such fields results in difficulties
when learning logistic.
• For us to tackle such we need to firstly discuss the importance
definitions closely related to logistics practices and processes, starting
from:
• products, services and the product life cycle
• – labelled the hearts of businesses and are also the reason why a business exists.
Products, services and the product life cycle

• a good is something that has an economic utility or satisfies an

economic want.
• A product is something brought about by intellectual or physical
effort.
• Materials are the elements, constituents, or substances of which
something is composed
• A component is, one of several parts that together make up a
whole machine or system
Dimensions of goods

• First dimension is the use of goods:

• Consumer goods (products or services) are mainly direct consumption
mainly.
• Investment goods (assets/ machinery) are used by the enterprise to
produce or develop consumer goods
• In Sihle’s Brew Coffee Time there are machines bought specifically to
produce the end product.
• Second dimension is the nature of goods:
• Material goods (Physical/tangible products)
• Goods of a nonmaterial nature (nonmaterial goods)
Dimensions of goods

• Second dimension is the nature of goods:

• Material goods (Physical/tangible products)
• Goods of a nonmaterial nature (nonmaterial goods)
Figure 1. The degree of comprehensiveness

• Figure 1, shows a further dimension:

• “The degree of comprehensiveness of a product is the way in which the
product is understood by the consumer”.
• With the degree of Comprehensiveness, a customer judges based on
three elements namely, a product, a process and an enterprise at large.
• There is a likelihood that Sihle’s Brew Coffee Time will be judged by the
customer through the variety coffee that the enterprise produces (just
the product), or by the processes that are used to produce (which is a
product including the service) and lastly by the Sihle’s Brew Coffee Time
as a company. ( this will be the product, services and the company)
Figure 1. The degree of comprehensiveness
Product life cycle

• Three stages of product life cycle

• Design and Manufacturing
• Service and use
• Disposal
• Recycling
• Life cycle of material products
• Life cycle of nonmaterial products
Questions
• What are the concepts labelled as the heart of the business/ enterprise
A. Products and services
B. Operations, Logistics and Supply Chain Management
C. Products, Services and Product life-cycle
D. Good and Goods
E. Materials and Components
• Discuss the following concepts with practical examples
• Good
• Goods
• Materials
• Components
• Product
• Differentiate between a materials and component
• Demonstrate the three dimensions of goods
 Logistics and Operations Management

• An enterprise/organisation requires operations management in order to ensure

that customers are provided with products that are of the right quality and
quantity at the right time and place
• Sihle’s Coffee Brew Time with all the services that it provides to the customer in
the retail sector, and other organisations such as (Kia motors) also trainings and
set-up.
• This is possible through the logistics and supply chain management as the
subsections of the operations management.
• Operations Management __ Heart of the enterprise
• Supply Chain Management__ maintain relations
• Logistics__ effective and efficient operations of products
Logistics and Operations Management

• Logistics is the organisation, planning, and realisation of the forward and

reverse flow and storage of goods, data, and control along the entire product
life cycle
• Logistics management is the efficient and effective management of logistics
activities to meet customers’ requirements
• Operations is a function or a system that transforms input to output of greater
value.
• Operations management is the planning, scheduling, and control of the
activities that transform input into finished goods and services.
• Value-added management can thus be used as a generalized term for all the
types of management mentioned above.
Figure 1.2 shows a graphical representation of how the terms fit
the company's internal and external activities.
Synchronisation between Supply and Demand

• Lead time is a span of time required to perform a process (or a series of operations).
• Customer tolerance time, or demand lead time, is the time span the customer will
(or can) tolerate from order release to the delivery of the product or the fulfillment
of the service
• Delivery lead time is the total time required to receive, fill, and deliver an order,
from the receipt of a customer order to the delivery of the product or the fulfillment
of the service
• The delivery policy is the company's objective for the time to deliver the product
after the receipt of a customer's order
Synchronisation between Supply and Demand

• A fundamental problem in logistics management is temporal

synchronisation between supply and demand. Here are some
basic definitions:
• Supply ___quantity of goods available for use
• Demand ___need for a particular product or component.
• Actual demand ___composed of customer orders, and often
allocations of components to production or distribution
• Demand forecast___ estimation of future demand. Demand
prognosis is used here synonymously
Synchronisation between Supply and Demand

• In a market oriented economy

• Consumers expressed a need for demand
• Manufacturer attempts to fill a demand
• In principle demand and manufacturing are controlled by a demand
• Could only starts when the demand arises
• The ideal orientation of a producer towards consumer is not usually possible
• Delivery lead time might be longer than the tolerance time
• Groceries, raw material,
Synchronization between Supply and Demand

• Storage plays a vital role in solving this problem,

• By allowing temporal synchronization between supply and demand
• Is the retention of goods for future use or shipment
• Inventory includes all physical items in any form that can be found in the
company and appears as:
• On-hand balance - items used to support production
• In-process inventory, or work-in-process (WIP)
• In-transit inventory,
Synchronization between Supply and Demand

• Inventory helps companies to meet customers tolerance time

• Disadvantages
• Ties up capital
• requires space
• Limited shelf life
• Inventory only makes sense where stored goods will be turned over
rapidly enough
• Minimization of disadvantages
• Inventory must be positioned at the right level during design and manufacturing
The Supply Chain, Supply Chain Management
and Integral Logistics Management

• For products of certain complexity, design and manufacturing are

distributed among different companies/ different departments
within a company
• The reasons are :
• Quality
• Costs
• Delivery
• Flexibility
The Supply Chain, Supply Chain Management
and Integral Logistics Management

• Network of sub-logistics are formed with various companies to

participate in design and manufacturing
• Logistics network is the joining several companies to form a
comprehensive logistics
• The end user of the logistics network is the customer
The Supply Chain, Supply Chain Management and
Integral Logistics Management
• From the perspective of the end user, distribution network and
distribution system, also belong to the value added
• From only the delivery and possibly service the customer order is fulfilled
• Distribution network/ system is a group of interrelated facilities
• Service network is a group of interrelated facilities for performing
all services in connection with materials and nonmaterial goods
• This then leads us to:
• Supply chain is the global network used to deliver products, and
services from raw material to end consumer through an
engineered flow of information, physical goods and cash.
• Comprehensive definition can also includes disposal and recycling
The Supply Chain, Supply Chain Management
and Integral Logistics Management

• Supply chain Community is the set of all partners that defibe the
complete supply chain
• Supply chain management (SCM) is the design, planning, execution,
control and monitoring of supply chain activities with the objective
of creating net value, building a competitive infrastructure,
leveraging worldwide logistics, synchronizing supply with demand
and measuring performance globally
• Integral logistics management is the management of the
comprehensive supply chain , that is the entire product life cycle
within and across companies
The Role of Planning and Control and the
SCOR Model
• Planning is the process of setting goals for the organisation and choosing various ways to use
the organisation's resources to achieve the goals.
• Supply chain planning is the determination of a set of policies and procedures that govern the
operation of a supply chain. It includes the determination of marketing channels, promotions,
respective quantities and timing, inventory and replenishment policies, and production
policies. Planning establishes the parameters within which the supply chain will operate.
• Supply chain planning aims at having the right item in the right quantity at the right time at
the right place for the right price in the right condition for the right customer - every time.
• This task must include the entire supply chain. Within and across all companies involved, all
partial processes must be integrated.
Once the weighing of the entrepreneurial objectives is done, supply chain planning within and
across companies entails a number of principles, methods, and procedures in order to
accomplish the following subtasks: