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

Secondary Activities

Human Resource Management Technology Development Procurement Inbound Logistics Outbound Operations Logistics Marketing Service & Sales

Primary Activities

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

Material Flow

Stage 1
Purchasing Material Control Production Sales

Customer Service
Distribution

Material Flow
Material management

Stage 2
Manufacturing management Distribution

Customer Service

Material Flow
Material management

Stage 3
Manufacturing Distribution management

Customer Service

Material Flow
Suppliers

Stage 4
Internal Supply chain Customers

Customer Service

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.