Logistics and Supply Chain Management
Contents
Logistics and Supply Chain Management ....................................................................... 1
Chapter 1: What is “Logistics” and “Supply Chain Management” ................................. 2
LOGISTICS ............................................................................................................ 3
SUPPLY CHAIN MANAGEMENT............................................................................... 3
DISTINGUISHING LOGISTICS AND SCM .................................................................. 6
THE EVOLUTION OF LOGISTICS AND SCM .............................................................. 6
LINK TO COMPANY STRATEGY................................................................................ 7
Chapter 2: Inventory Management ............................................................................. 8
THE IMPORTANCE OF INVENTORY MANAGEMENT ................................................... 8
THE ECONOMIC ORDER QUANTITY (EOQ) MODEL ................................................... 9
SAFETY STOCK .................................................................................................... 10
MATCHING INVENTORY POLICY WITH INVENTORY TYPE........................................ 10
INVENTORY REDUCTION PRINCIPLES .................................................................. 10
Chapter 3: Purchasing – Procurement ...................................................................... 12
PROCUREMENT vs PURCHASING ......................................................................... 12
CLASSIFICATIONS OF ITEMS ................................................................................ 12
PORTFOLIO ANALYSIS ......................................................................................... 13
THREE LEVELS OF PROCUREMENT....................................................................... 14
PROCUREMENT PROCESS ................................................................................... 15
ETHICAL SOURCING & SUSTAINABILITY................................................................ 16
Chapter 4: Manufacturing ........................................................................................ 17
THE EVOLUTION OF MANUFACTURING ................................................................ 17
BOM AND PRODUCTION PLANNING..................................................................... 18
LEAN PRODUCTION ............................................................................................ 18
AGILE SUPPLY CHAINS AND MASS CUSTOMIZATION ............................................. 19
CUSTOMER ORDER DECOUPLING POINT (CODP) ................................................. 19
, Chapter 5: Distribution ............................................................................................ 21
DISTRIBUTION .................................................................................................... 21
TRANSPORTATION .............................................................................................. 21
WAREHOUSING .................................................................................................. 23
Chapter 6: Reserve Logistics & Sustainability ............................................................ 25
DEFINITION OF REVERSE LOGISTICS .................................................................... 25
MOTIVATIONS FOR REVERSE LOGISTICS .............................................................. 26
RECOVERY OPTIONS IN REVERSE LOGISTICS ....................................................... 26
IMPACT ON THE SUPPLY CHAIN ........................................................................... 27
SUSTAINABILITY IN THE SUPPLY CHAIN ................................................................ 28
THE GREEN REVOLUTION & SUPPLY CHAIN REDESIGN ......................................... 28
TECHNOLOGY DEVELOPMENTS ........................................................................... 29
Chapter 7: Supply Chain Relationships & Collaboration ............................................. 29
GLOBALIZATION OF SUPPLY CHAINS ................................................................... 29
OUTSOURCING................................................................................................... 29
LOGISTICS OUTSOURCING.................................................................................. 30
OFFSHORING ..................................................................................................... 31
BULL WHIP ......................................................................................................... 32
Chapter 8: International Trade & Globalization .......................................................... 32
GROWTH IN INTERNATIONAL TRADE .................................................................... 32
CONTAINERS: THE HUMBLE HERO ....................................................................... 33
MEASURING LOGISTICS PERFORMANCE .............................................................. 34
GLOBALIZATION.................................................................................................. 34
BELGIAN STATUS ................................................................................................ 34
Chapter 1: What is “Logistics” and “Supply Chain Management”
‘Black Friday Week’ -> what does this have to do with logistics? (a lot of transportation,
limited space in stores & a lot of returns)
,What’s the difference between logistics and supply chain management ? Logistics focuses
on the efficient movement and storage of goods, while supply chain management oversees
the entire process from sourcing to delivery, coordinating all stakeholders for overall
efficiency.
LOGISTICS
Involves getting the right:
- Product
- Way
- Quantity and right quality
- Place and the right time
- For the right customer and the right cost
The process of planning, implementing and controlling procedures for the efficient
and effective transportation and storage of goods including services.
Logistics Management: primarily concerned with optimizing flows within the
organization
! Mission is to serve the customer in the most cost-effective way !
SUPPLY CHAIN MANAGEMENT
= a system of organization, people, activities, information and resources involved in
moving a product or services from supplier to customer
Supply Chain = a network of connected and interdependent organizations mutually
and co-operatively working together to control, manage and improve the flow of
materials, resources (money + people + equipment) and information from suppliers
to end users.
, The first diagram presents a
linear supply chain model,
moving from suppliers to
customers. Key elements
include:
• Downstream (Material Flow):
Goods move from suppliers
through procurement,
operations, and distribution
before reaching customers.
• Upstream (Information Flow): Data on requirements and demand flows back from
customers to suppliers.
• Money Flow: Payment moves in the opposite direction, from customers to
suppliers.
The diagram also depicts the evolution of the supply chain, transitioning from
fragmented functions to full integration.
Example: A car manufacturing supply chain:
1. Suppliers provide raw materials (steel, electronics, tires).
2. Procurement purchases these materials.
3. Operations (manufacturing plants) assemble vehicles.
4. Distribution delivers cars to dealerships.
5. Customers buy vehicles from dealerships.
6. Information flows back for demand forecasting.
The second diagram presents a more
circular, interconnected supply chain. It
highlights:
• Demand-driven flow, starting with
customer demand.
• Inventory management as a
central component.
Contents
Logistics and Supply Chain Management ....................................................................... 1
Chapter 1: What is “Logistics” and “Supply Chain Management” ................................. 2
LOGISTICS ............................................................................................................ 3
SUPPLY CHAIN MANAGEMENT............................................................................... 3
DISTINGUISHING LOGISTICS AND SCM .................................................................. 6
THE EVOLUTION OF LOGISTICS AND SCM .............................................................. 6
LINK TO COMPANY STRATEGY................................................................................ 7
Chapter 2: Inventory Management ............................................................................. 8
THE IMPORTANCE OF INVENTORY MANAGEMENT ................................................... 8
THE ECONOMIC ORDER QUANTITY (EOQ) MODEL ................................................... 9
SAFETY STOCK .................................................................................................... 10
MATCHING INVENTORY POLICY WITH INVENTORY TYPE........................................ 10
INVENTORY REDUCTION PRINCIPLES .................................................................. 10
Chapter 3: Purchasing – Procurement ...................................................................... 12
PROCUREMENT vs PURCHASING ......................................................................... 12
CLASSIFICATIONS OF ITEMS ................................................................................ 12
PORTFOLIO ANALYSIS ......................................................................................... 13
THREE LEVELS OF PROCUREMENT....................................................................... 14
PROCUREMENT PROCESS ................................................................................... 15
ETHICAL SOURCING & SUSTAINABILITY................................................................ 16
Chapter 4: Manufacturing ........................................................................................ 17
THE EVOLUTION OF MANUFACTURING ................................................................ 17
BOM AND PRODUCTION PLANNING..................................................................... 18
LEAN PRODUCTION ............................................................................................ 18
AGILE SUPPLY CHAINS AND MASS CUSTOMIZATION ............................................. 19
CUSTOMER ORDER DECOUPLING POINT (CODP) ................................................. 19
, Chapter 5: Distribution ............................................................................................ 21
DISTRIBUTION .................................................................................................... 21
TRANSPORTATION .............................................................................................. 21
WAREHOUSING .................................................................................................. 23
Chapter 6: Reserve Logistics & Sustainability ............................................................ 25
DEFINITION OF REVERSE LOGISTICS .................................................................... 25
MOTIVATIONS FOR REVERSE LOGISTICS .............................................................. 26
RECOVERY OPTIONS IN REVERSE LOGISTICS ....................................................... 26
IMPACT ON THE SUPPLY CHAIN ........................................................................... 27
SUSTAINABILITY IN THE SUPPLY CHAIN ................................................................ 28
THE GREEN REVOLUTION & SUPPLY CHAIN REDESIGN ......................................... 28
TECHNOLOGY DEVELOPMENTS ........................................................................... 29
Chapter 7: Supply Chain Relationships & Collaboration ............................................. 29
GLOBALIZATION OF SUPPLY CHAINS ................................................................... 29
OUTSOURCING................................................................................................... 29
LOGISTICS OUTSOURCING.................................................................................. 30
OFFSHORING ..................................................................................................... 31
BULL WHIP ......................................................................................................... 32
Chapter 8: International Trade & Globalization .......................................................... 32
GROWTH IN INTERNATIONAL TRADE .................................................................... 32
CONTAINERS: THE HUMBLE HERO ....................................................................... 33
MEASURING LOGISTICS PERFORMANCE .............................................................. 34
GLOBALIZATION.................................................................................................. 34
BELGIAN STATUS ................................................................................................ 34
Chapter 1: What is “Logistics” and “Supply Chain Management”
‘Black Friday Week’ -> what does this have to do with logistics? (a lot of transportation,
limited space in stores & a lot of returns)
,What’s the difference between logistics and supply chain management ? Logistics focuses
on the efficient movement and storage of goods, while supply chain management oversees
the entire process from sourcing to delivery, coordinating all stakeholders for overall
efficiency.
LOGISTICS
Involves getting the right:
- Product
- Way
- Quantity and right quality
- Place and the right time
- For the right customer and the right cost
The process of planning, implementing and controlling procedures for the efficient
and effective transportation and storage of goods including services.
Logistics Management: primarily concerned with optimizing flows within the
organization
! Mission is to serve the customer in the most cost-effective way !
SUPPLY CHAIN MANAGEMENT
= a system of organization, people, activities, information and resources involved in
moving a product or services from supplier to customer
Supply Chain = a network of connected and interdependent organizations mutually
and co-operatively working together to control, manage and improve the flow of
materials, resources (money + people + equipment) and information from suppliers
to end users.
, The first diagram presents a
linear supply chain model,
moving from suppliers to
customers. Key elements
include:
• Downstream (Material Flow):
Goods move from suppliers
through procurement,
operations, and distribution
before reaching customers.
• Upstream (Information Flow): Data on requirements and demand flows back from
customers to suppliers.
• Money Flow: Payment moves in the opposite direction, from customers to
suppliers.
The diagram also depicts the evolution of the supply chain, transitioning from
fragmented functions to full integration.
Example: A car manufacturing supply chain:
1. Suppliers provide raw materials (steel, electronics, tires).
2. Procurement purchases these materials.
3. Operations (manufacturing plants) assemble vehicles.
4. Distribution delivers cars to dealerships.
5. Customers buy vehicles from dealerships.
6. Information flows back for demand forecasting.
The second diagram presents a more
circular, interconnected supply chain. It
highlights:
• Demand-driven flow, starting with
customer demand.
• Inventory management as a
central component.
