OBS210 exam
Chapter 1: Introduction to logistics and supply chain management
Megatrends
Globalisation- most significant factor to change business operations over the year. It’s
the movement towards integrated global economy. Also leads to the compression of
time and distance, and disappearance of traditional political boundaries.
Empowered consumer- today’s consumers are more empowered than ever. Consumers
can compare prices online, therefore demand competitive prices.
Shift in global economic power- rebalancing of global economic and business activity is
transforming the BRICS countries, from being sources of labour and production to
consumption-focused economies. May lead to new competitor profiles, mature
businesses become less attractive.
Demographic shifts- big demographic growth and declines will contribute to resource
scarcity, shifts in economic power and drastic changes in societal norms. Sifts can
increase pressure to create jobs and can affect business models.
Rise in technology- changes dynamics of business. Both consumers and firms use
unlimited information, and creates collaboration opportunities. Rise in technology has
created new industries and markets.
Covid-19 pandemic- impact was highly disruptive and very challenging on supply chains.
Global cooperation will be needed to develop suitable humanitarian supply chains
(ventilators) that will satisfy demand in future.
Climate change and resource scarcity- demand for energy and water continues to
increase. In some places fishing, farming and hunting is impossible because of extreme
weather conditions and rising sea levels. Scarce resources cause conflict and political
tension.
Defining logistics
Military logistics- focuses on getting the right support to the right place and time;
includes ammunition, equipment, vehicles and medical services.
Engineering logistics- refers to concepts such as integrated logistic support, life cycle
analyses, system operation and support, and maintenance management.
Business logistics- applied in commercial environment, as well as supply and demand of
raw materials and finished goods. Fig1.1 pg6
CSCMP defines logistics management as follows- the part of supply chain
management that plans, implements, and controls efficient, effective forward
and reverse flow and storage of goods, services and related information
between the point of origin and consumption in order to meet customers’
requirements.
Boundaries and relationship- include inbound and outbound transport
management, fleet-, warehousing, materials handling, order fulfilment, logistic
Megan Meiring
, network design, inventory management, supply/demand planning and
management of 3rd-party logistic services providers.
Production logistics- phase between raw materials and finished products. Excludes
physical supply and distribution, but interfaces on inbound side with material
requirements planning (MRP) or material resource planning (MRPII); and outbound side,
with distribution requirements planning (DRP).
Reverse logistics- refers to need of activities such as handling return loads; disposal of
packaging materials, obsolete products and materials; as well as return of appliances,
components and equipment. Reverse of distributing goods and products to the same
origins of solid waste.
Construction logistics- delivery of construction materials at right time and place. New
buildings or old smashed up buildings need significant qualities of building materials to
be delivered and waste removed.
City logistics- moving freight to destination in most cost-efficient way. Use city transport
modes in an integrated system of links and nodes of freight terminals and distribution
centres.
Humanitarian logistics- demonstrate peculiar characteristics which require specific
responses. Primary objective is to alleviate the suffering of vulnerable people. – concept
of SCM.
Defining SCM
For a business to operate successful, they need to be more involved with their suppliers
and customers
SCM first use in popular sense by Oliver and Webber (1982), then replicated by Houlihan
(1984) to describe management of materials flows across organisational borders.
Several investigators in the term SCM; Ellram (1991), Christopher (1992), Harland (1994),
Lamming (1996), Handfield & Nichols (1999).
Megan Meiring
, Christopher (1992), Macbeth and Ferguson (1994) as authors said the competition takes
place between supply chains instead of individual firms.
Set of inter- and intra-firm processes.
Gattorna and Ellis (2020:189); “chain” implies the complex network of flows and
relationships rather than neat linear arrangement.
“Network of networks” describes the reality of supply chain functioning somewhat better
than a linear perspective.
Main difference between logistics and supply chain is that logistics is focused on act,
processes and management i.t.o. the flow of materials in a specific firm.
Logistics never focused on inter-relationships in upstream and downstream entities.
Supply chain tries to integrate elements that are clearly beyond organisational borders.
Logistics viewed as adding value to supply chain process.
CSCMP- it encompasses the planning and management of all act involved in sourcing
and procurement, conversion, and all logistics management act. SCM integrates supply
and demand management within and across companies.
Boundaries and relationships in SCM- it’s an integrating function with primary
responsibility for linking major business functions and business processes within and
across companies into a cohesive and high-performing business model.
Lambert (2008;9) said the structure of act in and between firms is an important
foundation for the establishment of high-performance supply chains.
Lambert (2008;10) identifies following SCM processes:
Customer relationship management
Customer service management
Demand management
Order fulfilment
Manufacturing flow management
Supplier relationship management
Product development and commercialisation
Returns management
Christopher (2016;2-3), logistics is essentially a planning orientation and framework that
seeks to create a single plan for the flow of products and information through a
business. Supply chain management builds on this framework and seeks to achieve
linkage and coordination between processes of other entities in the pipeline, such as
suppliers and customers and company. It is clear that the actual supply chains compete,
as opposed to the products, commodities or companies.
Megan Meiring
, Third-party logistics
- 3PL refers to the management structure where a 3rd party fulfils certain roles and
responsibilities regarding the provision of logistics services between supplier (1 st party)
and customers (2nd party).
- Types of 3PL service providers
1. Transportation based
2. Warehouse and distribution based
3. Forwarder based
4. Shipper/management based
5. Finance based
6. Information based
Fourth-party logistics
- Emerged 1996
- An integrator that assembles the resources, capabilities and technology of its own
organisation and other organisations to design, build and run comprehensive supply
chain solutions (Gattorna, 2006;206).
- Differs from 3PL in following:
- 4PL organisation is often a separate entity established as a joint venture/long-term
contract between a primary client and 1/more partners.
- Acts as a single interface between client and multiple logistic service providers.
- All aspects of a client’s supply chain are managed by 4PL.
- It’s also possible for major 3PL provider to form 4PL within existing structure.
- Operates according following models:
Industry solution model- coordinate and manage the distribution operations of
its primary clients initially, and then those of other related companies within the
industry
Supply chain partners model- manage an integrated industry supply chain,
consisting of manufactures, materials suppliers, 3PL providers and management
consultants.
Megan Meiring
Chapter 1: Introduction to logistics and supply chain management
Megatrends
Globalisation- most significant factor to change business operations over the year. It’s
the movement towards integrated global economy. Also leads to the compression of
time and distance, and disappearance of traditional political boundaries.
Empowered consumer- today’s consumers are more empowered than ever. Consumers
can compare prices online, therefore demand competitive prices.
Shift in global economic power- rebalancing of global economic and business activity is
transforming the BRICS countries, from being sources of labour and production to
consumption-focused economies. May lead to new competitor profiles, mature
businesses become less attractive.
Demographic shifts- big demographic growth and declines will contribute to resource
scarcity, shifts in economic power and drastic changes in societal norms. Sifts can
increase pressure to create jobs and can affect business models.
Rise in technology- changes dynamics of business. Both consumers and firms use
unlimited information, and creates collaboration opportunities. Rise in technology has
created new industries and markets.
Covid-19 pandemic- impact was highly disruptive and very challenging on supply chains.
Global cooperation will be needed to develop suitable humanitarian supply chains
(ventilators) that will satisfy demand in future.
Climate change and resource scarcity- demand for energy and water continues to
increase. In some places fishing, farming and hunting is impossible because of extreme
weather conditions and rising sea levels. Scarce resources cause conflict and political
tension.
Defining logistics
Military logistics- focuses on getting the right support to the right place and time;
includes ammunition, equipment, vehicles and medical services.
Engineering logistics- refers to concepts such as integrated logistic support, life cycle
analyses, system operation and support, and maintenance management.
Business logistics- applied in commercial environment, as well as supply and demand of
raw materials and finished goods. Fig1.1 pg6
CSCMP defines logistics management as follows- the part of supply chain
management that plans, implements, and controls efficient, effective forward
and reverse flow and storage of goods, services and related information
between the point of origin and consumption in order to meet customers’
requirements.
Boundaries and relationship- include inbound and outbound transport
management, fleet-, warehousing, materials handling, order fulfilment, logistic
Megan Meiring
, network design, inventory management, supply/demand planning and
management of 3rd-party logistic services providers.
Production logistics- phase between raw materials and finished products. Excludes
physical supply and distribution, but interfaces on inbound side with material
requirements planning (MRP) or material resource planning (MRPII); and outbound side,
with distribution requirements planning (DRP).
Reverse logistics- refers to need of activities such as handling return loads; disposal of
packaging materials, obsolete products and materials; as well as return of appliances,
components and equipment. Reverse of distributing goods and products to the same
origins of solid waste.
Construction logistics- delivery of construction materials at right time and place. New
buildings or old smashed up buildings need significant qualities of building materials to
be delivered and waste removed.
City logistics- moving freight to destination in most cost-efficient way. Use city transport
modes in an integrated system of links and nodes of freight terminals and distribution
centres.
Humanitarian logistics- demonstrate peculiar characteristics which require specific
responses. Primary objective is to alleviate the suffering of vulnerable people. – concept
of SCM.
Defining SCM
For a business to operate successful, they need to be more involved with their suppliers
and customers
SCM first use in popular sense by Oliver and Webber (1982), then replicated by Houlihan
(1984) to describe management of materials flows across organisational borders.
Several investigators in the term SCM; Ellram (1991), Christopher (1992), Harland (1994),
Lamming (1996), Handfield & Nichols (1999).
Megan Meiring
, Christopher (1992), Macbeth and Ferguson (1994) as authors said the competition takes
place between supply chains instead of individual firms.
Set of inter- and intra-firm processes.
Gattorna and Ellis (2020:189); “chain” implies the complex network of flows and
relationships rather than neat linear arrangement.
“Network of networks” describes the reality of supply chain functioning somewhat better
than a linear perspective.
Main difference between logistics and supply chain is that logistics is focused on act,
processes and management i.t.o. the flow of materials in a specific firm.
Logistics never focused on inter-relationships in upstream and downstream entities.
Supply chain tries to integrate elements that are clearly beyond organisational borders.
Logistics viewed as adding value to supply chain process.
CSCMP- it encompasses the planning and management of all act involved in sourcing
and procurement, conversion, and all logistics management act. SCM integrates supply
and demand management within and across companies.
Boundaries and relationships in SCM- it’s an integrating function with primary
responsibility for linking major business functions and business processes within and
across companies into a cohesive and high-performing business model.
Lambert (2008;9) said the structure of act in and between firms is an important
foundation for the establishment of high-performance supply chains.
Lambert (2008;10) identifies following SCM processes:
Customer relationship management
Customer service management
Demand management
Order fulfilment
Manufacturing flow management
Supplier relationship management
Product development and commercialisation
Returns management
Christopher (2016;2-3), logistics is essentially a planning orientation and framework that
seeks to create a single plan for the flow of products and information through a
business. Supply chain management builds on this framework and seeks to achieve
linkage and coordination between processes of other entities in the pipeline, such as
suppliers and customers and company. It is clear that the actual supply chains compete,
as opposed to the products, commodities or companies.
Megan Meiring
, Third-party logistics
- 3PL refers to the management structure where a 3rd party fulfils certain roles and
responsibilities regarding the provision of logistics services between supplier (1 st party)
and customers (2nd party).
- Types of 3PL service providers
1. Transportation based
2. Warehouse and distribution based
3. Forwarder based
4. Shipper/management based
5. Finance based
6. Information based
Fourth-party logistics
- Emerged 1996
- An integrator that assembles the resources, capabilities and technology of its own
organisation and other organisations to design, build and run comprehensive supply
chain solutions (Gattorna, 2006;206).
- Differs from 3PL in following:
- 4PL organisation is often a separate entity established as a joint venture/long-term
contract between a primary client and 1/more partners.
- Acts as a single interface between client and multiple logistic service providers.
- All aspects of a client’s supply chain are managed by 4PL.
- It’s also possible for major 3PL provider to form 4PL within existing structure.
- Operates according following models:
Industry solution model- coordinate and manage the distribution operations of
its primary clients initially, and then those of other related companies within the
industry
Supply chain partners model- manage an integrated industry supply chain,
consisting of manufactures, materials suppliers, 3PL providers and management
consultants.
Megan Meiring
