TRL 2604

Supply chain management [SCM] definitions:  Consists of multiple firms collaborating to leverage strategic positioning & improve operating efficiency.  Encompasses planning & management of all activities involved in sourcing & procurement, conversion, all logistics management activities.  Includes coordination & collaboration with channel partners (i.e. suppliers / intermediaries/third party service providers/customers).  Integrates supply & demand management within & across companies. Supply Chain:  Is the alignment of firms that bring products/services to the market.  Consists of the key business processes (from original supplier to end-user) that provide products/services/information which add value for customers & stakeholders. Logistics:  Process of planning, implementing & controlling procedures for efficient & effective transportation and storage of goods, services & information from point of origin to point of consumption for the purpose of conforming to customer requirements.  The work required to move & position inventory within the broader framework of supply chain.  Definition includes in-, outbound, in- & external movements Logistics is the process that creates value by timing and positioning inventory and it is the combination of a firm’s - order management - transportation - Inventory - warehousing - materials handling - packaging  Logistics is concerned with satisfying customer expectations by ensuring that the required quantity of product or services are available at the place & time required at the lowest total cost. Integrated Logistics:  Serves to link & synchronize overall supply chain as continuous process & is essential for effective supply chain connectivity.  Integrating activities to achieve particular level of customer service at lowest total cost. Integration management = create value Economic Value Market Value Relevancy Value  Builds on economy of scale in operations as source of efficiency.  Seeks to fully utilize fixed assets to achieve the lowest total landed cost.  Its efficiency is quality product & Service creation.  Customer take-away = high quality at low price.  Presenting attractive assortment of products @ the right time & place.  Focuses on achieving economy of scope in product & service presentation.  Customer take-away = convenient product & service assortment & choice.  Involves customization of value adding services.  Means the right products & services, @ the right place.  Transforming ingredients into ready-to-eat meals / fashionable apparel.  Customer take-away = unique product/services bundle. Logistics SU 1 pg. 2; par. 1.3 & TB Ch. 1 pg.28-29  Is about satisfying customer expectations/adds value by ensuring required quantity of a particular product (raw materials/ semi-finished/finished products) is available at place and time required at the lowest total cost.  It involves a number of processes/activities that cut across various functional departments and even other participants in the supply chain. Goal of logistics: - service & cost - to support procurement - manufacturing - customer accommodation Renaissance: Because logistics is both old & new, the term characterizes the rapid change taking place in best practice. Logistical Competency SU 1 pg. 6; par. 1.4 & TB Ch. 2 pg.29-30 Logistical competency  Refers to a business’s level of performance with regard to logistics & customer requirements at realistic total cost expenditure.  Superior logistical performance can be essential for business success, resulting in a competitive advantage. To gain competitive advantage, customer value needs to be created. Creation of customer value depends largely on effective logistics/logistical competency - a relative assessment of the capability of a business to provide superior customer service at the lowest total cost. Effective logistics requires the integration of various basic work and functional areas, as well as logistical temporal/spatial integration. When Malfunction (something going wrong) occurs, competency can be measured in terms of recovery time Logistical Mission SU 1 pg. 6-7; par. 1.5 & TB Ch. 1 pg.30-33 Logistical service is measured by:  Availability: is the probability of having inventory to consistently meet customer material/product requirements.  Operational performance: deals with the time required to deliver customer's order; involves speed, consistency, flexibility  Service reliability: involves quality attributes of logistics. (accurate measurement of availability & operational performance) Logistical quality: it’s the product of careful planning supported by employee training, operational dedication, comprehensive measurement & continuous improvement Logistics value proposition: is matching operating competency & commitment to key customer expectations & requirements; a unique commitment of a firm to an individual/selected customer groups. Logistical Trade-Offs SU 1 pg. 7-9; par. 1.6 The Nature of Trade-Offs: SU 1 pg. 7; par 1.6.1 Trade-off: is simply a balance between two/more logistics functions to achieve total lowest cost.  Occurs when increased cost in one area is more than matched by cost reduction in other areas, resulting in lower total cost. Trade-Off Levels: SU 1 pg. 8; par 1.6.2 1) INTER-ORGANISATIONAL TRADE-OFFS:  Occur when using intermediaries (selecting wholesalers/ retailers /thirdparty logistical providers) in marketing channel.  Involve selecting least total cost supply chains - N.B. to use the correct intermediaries. If none were used, there would be:  close contact with the marketplace  proper control over key areas such as customer (end-user) service policy Use of intermediaries has distinct advantages:  Intermediaries in the channel specialise in particular activities which may result in economies of specialisation through the division of labour, for example, specialised sales staff.  Intermediary may achieve economies of scale by means of high volume at high throughput levels.  Results in reduction in contact costs, which are the costs of the contacts that need to be made between buyers and sellers in order to distribute a product. 2) INTER-FUNCTIONAL (INTERDEPARTMENTAL) TRADE-OFFS  Trade-offs between different management functions/departments