Introduction to Logistics and Supply Chain Management Notes Semester 2, 2015 Table of Contents Lecture 1 An Overview of Logistics & SCM... 2 Lecture 2 Demand Management & Order Fulfillment... 4 Lecture 3 Procurement: Sourcing and BuyingError! Bookmark not Lecture 4 Production & Operations Management. Error! Bookmark not Lecture 5 Inventory Management... Error! Bookmark not Lecture 6 Transportation & Freight LogisticsError! Bookmark not Lecture 7 Warehousing and distribution channels.. Error! Bookmark not Lecture 8 Supply chain technologies managing information: ERP, RFID, BI... Error! Bookmark not Lecture 9 Supply chain relationships... Error! Bookmark not Lecture 10 Supply Chain Network Design. Error! Bookmark not Lecture 11 Reverse, Green & Sustainable Supply Chain ManagementError! Bookmark not Lecture 12 Current trends and future challenges... Error! Bookmark not
Lecture 1 An Overview of Logistics & SCM Major external forces Globalisation Technology Organisational consolidation Empowered consumer Government policy and regulation Origins of supply chain management 1950s & 1960s - Mass production techniques used as principle cost reduction and productivity improvement strategies 1960s & 1970s - Development of Materials Requirements Planning (MRP) and Manufacturing Resource Planning (MRPII) to coordinate inventory management and improve internal communication 1980s & 1990s - Intense global competition lead manufacturers to adopt: Supply Chain Management (SCM) Just-In-Time (JIT) Total Quality Management (TQM) Business Process Reengineering (BPR) 2000s and beyond - Companies will focus on relationships, sustainability, and social responsibility - Companies will focus on improving supply chain capabilities with initiatives such as: Third-party service providers (3PLs) Integrating logistics Using transportation to facilitate rapid response Definitions of supply chain management Institute for supply management - The design and management of seamless, value-added processes across organisational boundaries to meet the real needs of the end customer Logistics and supply chain management society - The coordinated set of techniques to plan and execute all steps in the global network used to acquire raw materials from vendors, transform them into finished goods, and deliver both goods and services to customers Council of supply chain management professionals - The planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities also includes coordination with channel partners, which can be suppliers, intermediaries, third party service providers, and customers Supply chain management An integrated approach SCM is the art and science of integrating the flows of products, information and financials through the entire supply pipeline from the suppliers supplier to the customers customer.
Effective SCM 7 Rs Right product Right quantity Right condition Right place Right time Right customer Right cost Key foundations for effective SCM Supply Operations Logistics Integrations Supply base rationalisation, supplier alliances, SRM, global sourcing, ethics and sustainability Demand management, CPFR, MRP, ERP, inventory visibility, lean systems, six sigma quality systems Logistics management, customer relationship management, network design, RFID, global supply chains, sustainability, service response logistics Risk and security management, performance measurement, green supply chains Important elements of supply chain management Supply elements: - Supplier management improve performance through: Supplier evaluation (determining supplier capabilities) Supplier certification (third party or internal certification to assure product quality and service requirements) - Strategic partnerships Successful and trusting relationships with top-performing suppliers - Ethics and sustainability Recognising suppliers impact on reputation and carbon footprint Operation trends: - Demand management match demand to available capacity - Linking buyers & suppliers via MRP and ERP systems - Use lean systems to improve the flow of materials to reduce inventory levels - Employ six sigma to improve quality compliance among suppliers Logistics trends:
- Transportation management Tradeoff decisions between cost & timing of delivering/customer service via trucks, rail, water & air - Customer relationship management Strategies to ensure deliveries, resolve complaints, improve communications, & determine service requirements - Network design Creating distribution networks based on tradeoff decisions between cost & sophistication of distribution system Integration trends: - Supply chain process integration When supply chain participants work for common goals Requires intra-firm functional integration Based on efforts to change attitudes & adversarial relationships - Supply chain performance management Crucial for firms to know if procedures are working Other major issues for consideration Supply chain networks - The networks facilities and supporting transportation is important - Increased complexity for organisations is a problem - Inventory deployments Inventory duplication The bullwhip effect - Collection and storage of vast amount of data - Cost/value Efficiency (cost) and effectiveness (value) prevention of sub-optimisation - Organisational relationships Tradeoffs and optimisation - Performance measurement Technology - Challenge is to evaluate and successfully implement the technology Transportation management - 7 Rs Supply chain security - Concern and potential challenge since 9/11 Expanding the supply chain - Firms are expanding partnerships and building facilities in foreign markets Increasing supply chain responsiveness - Firms will increasingly need to be more flexible and responsive to customer needs - Supply chain will need to benchmark industry performance and meet and improve on a continuous basis - Responsiveness improvement will come from more effective and faster product & service delivery systems The GREENING of supply chains - Producing, packing, moving, storing, delivering and other supply chain activities can be harmful to the environment Lecture 2 Demand Management & Order Fulfillment Demand management The ability of firms throughout the supply chain to collaborate on activities related to the flow of product, services, information, and capital. Problems in achieving goal: Lack of coordination between departments
Too much emphasis on forecasts of demand, with less attention on the collaborative efforts and the strategic and operational plans Demand information is used more for tactical and operational than for strategic purposes Demand forecasting A forecast is an estimate of future demand & provides the basis for planning decisions - The goal is to minimize forecast error - The factors that influence demand must be considered when forecasting - Managing demand requires timely & accurate forecasts - Good forecasting provides reduced inventories, costs & stock-outs, and improved production plans & customer service Traditional forecasting - Determine the amount of product that will be purchased, when it will be purchased and where it will be purchased - Various statistical techniques exist for forecasting Forecasts are necessary - Serve as a plan for both marketing and operations to set goals and develop execution plans Types of demand Independent demand - Demand for a primary item - Also known as base demand Dependent demand - Directly influenced by demand for the independent item Factors affecting demand Random variations (eg. outbreak of epidemics) Trends (eg. latest fashion wear) Seasonal patterns (eg. festive seasions) Business cycles (eg. end of financial year) Types of forecasting techniques Qualitative forecasting methods - Generally used when data are limited, unavailable, or not currently relevant. Forecast depends on skill & experience of forecaster(s) & available information Quantitative methods