MAT3A LOGISTICS AND SUPPLY CHAIN MANAGEMENT Unit : I - V MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT

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1 MAT3A LOGISTICS AND SUPPLY CHAIN MANAGEMENT Unit : I - V MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT

2 TM Unit I - Syllabus Origin and Definition CONCEPTS IN LOGISTICS OBJECTIVES OF LOGISTICS FUNCTIONS OF LOGISTICS PHYSICAL DISTRIBUTION MARKETING FORCES SUPPLY CHAIN ACTIVITIES MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 2

3 TM Origin and Definition Logistics means organizing movement, equipment, activity, accommodation of Goods. Logistikas' were assigned the duties of providing services related to supply and distribution of resources. It is point of Origin to point of Consumption MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 3

4 TM CONCEPTS IN LOGISTICS Production concepts build-to-order, build-to-stock, flexible order production, including inbound consolidation centre s close to production locations Inventory concepts regional distribution centre s, rapid fulfillment depots and market stock points in particular countries Transportation concepts direct deliveries and cross-docking operations to consolidate, sort and distribute shipments in central or regional hub operations MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 4

5 TM OBJECTIVES OF LOGISTICS Cost Reduction and Profit Maximization Efficient Flow of Manufacturing Operations Competitive Edge Effective Communication System Sound Inventory Management MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 5

6 TM FUNCTIONS OF LOGISTICS Order Processing Logistical Packaging Transportation Warehousing Inventory Control Information Material Handling Storage MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT

7 TM PHYSICAL DISTRIBUTION Logistics Management Involves Material Management Physical Distribution Movement of raw materials Flow of finished products to plants from plants to customers MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 7

8 TM IMPORTANCE OF PHYSICAL DISTRIBUTION Creation of Utilities Reduction in distribution cost Increase in Sales Volume Broader Marketing Scope Larger market share Stabilities in prices MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 8

9 TM Functions of Physical Distribution Materials Handling Inventory Planning And Control Order Processing Transportation Communications Organizational Structure MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 9

10 Factors Influencing Marketing Channel Strategies MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 10 10

11 The Supply Chain of a Manufacturing Company MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 11 11

12 Improvements in Information Technology Improvements in information technology have created opportunities for improving distribution efficiency. The increased use of sophisticated supply chain management software, Web-based logistics systems, point-of-sale scanners, uniform product codes, satellite tracking and electronic transfer of order and payment data, MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 12 12

13 Unit II - Syllabus Inventory Control Ware housing Stores Management Demand Forecasting Routing Transportation Management 13 13

14 Material Handling The stock on hand of materials at a given time Inventory Control An itemized list of all physical assets To determine the quality of items on hand MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 14 14

15 Types of Inventory Control Production Inventories MRO Inventories In Process Inventories Finished Goods Inventories Transaction Inventory Speculative Inventory Precautionary Inventory MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 15 15

16 WARE HOUSE MANAGEMENT A warehouse management system (WMS) is a software application, designed to, support, optimize warehouse or distribution center management.. 16 MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 16

17 WARE HOUSE MANAGEMENT They facilitate management in their daily planning, organizing, staffing, directing, controlling to move and store materials into, within, and out of a warehouse while supporting staff in the performance of material movement MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 17 17

18 TYPES OF WARE HOUSE AUTOMATED WAREHOUSE PUBLIC WAREHOUSE CLIMATE CONTROLLED WAREHOUSE DISTRIBUTION CENTER PRIVATE WAREHOUSE MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 18 18

19 Role of ware house in Logistics System The warehouse is where the supply chain holds or stores goods. Functions of Warehouse includes, Product Mixing Docking Service Protection against contingencies MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 19 19

20 DEMAND FORECASTING Forecasting is a proactive processwhat products are needed where it is needed To whom it is needed In what quantity it is needed Demand forecasting is a customer focused activity MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 20 20

21 Forecasting Models Qualitative Time Series Casual Delphi Methods Moving Average Regression Expert Opinion Exponential Smoothing Multiple Regression Sales Force Composite Trend Projection Consumer Market Survey Decomposition MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 21 21

22 Advantages of Demand Forecasting Helps in approximating future requirements Accurate method as buyers needs and wants are clearly identified Most effective way of assessing demand for new firms Generates lots of idea Demand Forecasting is the scientific and analytical estimation of demand for a product. It is the process of determining how much of what products is needed when and where MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 22

23 Transportation Management Movement of persons and goods from one place to another Infrastructure is of great importance for the working of an economy. "The study of upper level management and the decision making process within the context of the transportation firm. Case studies and computer simulations concerning internal operations and profitable responses to changing industry trends." MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 23 23

24 Air Modes of Transport Waterways Road ways Railways Trucks Pipeline MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 24 24

25 Discussion on Transportation Economic Factors Shippers Factors Carrier Factors Alternative pricing strategies Distance Volume Density MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 25 25

26 Comparison of Transport Mode MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 26 26

27 Unit III Syllabus Supply chain Management Importance of Supply chain Management Value chain Components and Need for Supply chain Management MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 27 27

28 SUPPLY CHAIN MANAGEMENT Supply chain management is an integrated management of various functions in the areas of materials Operations Marketing Distribution Services The integration of key business process. MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 28 28

29 Nature of SCM Single Entity Inventory Approach Systems Approach Strategic Decision Supply chain Relationship Flexible Approach Doing the best one can MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 29 29

30 IMPORTANCE OF SUPPLY CHAIN MANAGEMENT Minimizing Uncertainty Reducing Lead times Minimizing the Number Of Stages Improving Flexibility Improving Process Quality Minimizing Variety Managing Demand Delay Differentiation kitting Supplies Planning for Multiple Supply chains MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 30

31 SUPPLY CHAIN EFFECTIVENESS Movement of Products Movement of Information Timing of Service Total Logistics Costs External Integrated Activities Internal Integrated Activities MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 31 31

32 VALUE CHAIN Value chain of SCM focuses on speedier flow of goods cash value Information SCM ensures superior customer value for core Competency by a blend of better quality logistical Services at minimum costs. 32 MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 32

33 COMPONENTS OF VALUE CHAIN CASH FLOW FLOW OF GOODS SUPPLIER SHIPPER PRODUCER TRANSPORTER CUSTOMER MARGIN INBOUND LOGISTICS OUTBOUND LOGISTICS FLOW OF INFORMATION VALUE QUALITY COSTS RESPONSE AVAILABILITY FLOW MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 33

34 CASH FLOW It flows in the backward direction The end user pays money to a retailer against the producer received by him It deals with the money paid for goods and services It keeps the total business alive and activated MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 34 34

35 GOODS FLOW It is the heart of total system It is always in the forward direction Raw materials flow from suppliers or vendors to the producer Systematic and sophisticated supply chain approach deals with better customer service with lower inventory level MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 35

36 FLOW OF INFORMATION It is as significant in the supply chain as blood is for human life It is in both direction for activation and improvement of the total supply chain The nature of backward direction facilitates coordination activities Forward information refers to operational activities MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 36

37 VALUE FLOW Value is delivered through the defined business activities The flow of value is always in the forward direction The value addition may be in the form quality, cost, response Appropriate SCM prevents from these embarrassments and enhances the value of the products MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 37

38 FRAME WORK FOR SUPPLY CHAIN SOLUTION Huge scope for logistical cost reduction and substantial improvements in service level. Revolutionary innovations in the field of Information Technology Communication Technology Inventory Control Technology MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 38

39 Unit IV Syllabus Role of a Manager in Supply Chain Management Supply chain Performance Drivers Key Enablers in Supply Chain Management Logistics and Supply Chain Management MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 39

40 Role of a Manager in SCM A supply chain manager is someone who is responsible for the management of equipment, hardware, and other logistical details of a company Supply chain managers must oversee the import or creation of raw materials to be used by the company. the supply chain manager also needs to be well-versed in process management and development to have an adequate understanding of how the company functions MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 40

41 ASPECTS OF SUPPLY CHAIN MANAGERS The first aspect regarding the theoretical functions of the operations and supply chain managers in most organizations, which we have evaluated in previous weeks. The second aspect The thrid aspect The fourth aspect overall corporate strategy that set regarding different variables in different time periods. regarding the special requirements that have need satisfying due to the particular combination of customer, product, industry and market regarding the corporate culture that has created by all level managers and non-managerial employees. MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 41

42 ROLE OF OPERATION By evaluating the role of operations and supply chain managers and trying to model from the viewpoint of the human interaction by two different dimensions, namely: a) performing for people b) performing through People MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 42

43 TYPES OF LOGISTICS Production Inventory MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 43

44 TYPES OF LOGISTICS Location Transportation Communication MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 44

45 SCM PERFORMANCE DRIVERS Production Inventory Location Transportation Information MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 45

46 KEY ENABLERS OF SCM Strategic Development Human Resource Management Infra structure Development Technology MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 46

47 KEYENABLERS OF SCM KEY ENABLERS Strategic Development Human Resource Management MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 47

48 KEYENABLERS OF SCM KEY ENABLERS Infra structure Development Technology MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 48

49 Unit V Syllabus Supply chain relationship Six Steps to Align Supply Chain with Corporate Strategy Business strategy in logistics Outsourcing 3 PL 4PL Recent trends in SCM MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 49

50 TM Supply chain relationship Managing those relationships strategically versus tactically can make a huge difference in the viability and reliability of each company's supply chain. The first ingredient to successful supply chain relationship management is having the ability to measure a supply chain partner's performance. MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 50

51 TM Six Steps to Align Supply Chain with Corporate Strategy 1. Define and communicate a clear corporate strategy. 2. Identify the areas of your corporate strategy that are enabled by the supply chain 3. Align supply chain performance metrics with the corporate strategy. 4. Structure your supply chain to optimize the strategic goals. 5. Align incentives end to end. 6. Keep refreshing the strategy and alignment process MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 51

52 TM Business strategy in logistics Logistics strategy is the science of evaluating the most cost effective methodology of distributing goods to market while achieving service level objectives. When establishing an effective logistics strategy, you need to understand to what degree logistics impacts your operations and your customers' operations. MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 52

53 MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 53

54 TM Outsourcing In business, outsourcing is "an agreement in which one company contracts-out a part of their existing internal activity to another company. It involves the contracting out of a business process (e.g. payroll processing, claims processing) and operational, and/or non-core functions (e.g. manufacturing, facility management, call center support) to another party (see also business process outsourcing). The concept "outsourcing" came from the American Glossary 'outside resourcing' and it dates back to at least 1981.Outsourcing sometimes, though not always, involves transferring employees and assets from one firm to another. Outsourcing is also the practice of handing over control of public services to private enterprise MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 54

55 TM MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 55

56 TM Third party logistics (3PL) Third-party logistics (abbreviated 3PL, or sometimes TPL) in logistics and supply chain management is a company's use of thirdparty businesses to outsource elements of the company's distributionand fulfillment services. Third-party logistics providers typically specialize in integrated operation, warehousing and transportation services which can be scaled and customized to customers' needs based on market conditions, such as the demands and delivery service requirements for their products and materials MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 56

57 TM Fourth party logistics The concept of a 4PL provider is an integrator that accumulates resources, capabilities and technologies to run complete supply chain solutions. Main Difference between 3PLs and 4PLs. The 3PL targets a single function, whereas the 4PL manages the entire process. A 4PLmay manage the 3PL. MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 57

58 TM Fourth party logistics MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 58

59 TM RFID and SCM Dramatic change in the management of supply chains Extraordinary Asset Tracking ability Wal-Mart, Target. etc. have their suppliers RFID enabled World-wide demand of RFID tags $1 million FMCGs and Food Processing companies at various levels of RFID implementation on Pallet, Case, Item level. MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 59

60 TM Bar Code Vs. RFID Bar Code Deficiency Line of sight technology Unable to withstand harsh conditions (dust, corrosive), must be cleaned and not difformed. No data adition option No unique identification Slow and labour intensive Easy to tamper and copy Little potential for further development RFID Solution Able to scan and read from different angles and through certain material. Able to function much better in such conditions Write enable Unique codeing is possible and item can be tracked at individual level Fast and less labour intensive Difficult to copy and tamper Technology advancement is posible, new chip, better packaging. MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 60

61 TM Recent trends in SCM MAT3A- LOGISTICS AND SUPPLY CHAIN MANAGEMENT 61