Week 1 - Introduction to Logistics & Supply Chain Management
1. Overview
SCM: raw material (purchasing from the initial suppliers who provide input products –
procuring, sourcing, and buying) -> manufacturing products-> distributor -> wholesaler/
retailer (supermarket, convenience store,…) -> final customer
=> To understand the Q that the firm provides in the market, we have to get insight into the
market demand (final customer)
=> It is vital to have S = D (produce accurate Q of goods – production and operation mana)
2. Modern SCM & Complexities
● Institute for Supply Management
– The design and management of seamless, value-added processes across organizational
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
- SCs are an important element of capital consumption
+ Efficient & effective SC => free-up valuable resources, improve customer fulfillment
systems => increase ROI/ assets & improve shareholder value.
+ Need to focus on the end-users; be flexible & responsive
- Logistics is a vital part of SCM, which is also an area of management having 4 sub-
disciplines: business, military, service & event
+ adds place, time & quantity utilities to products & enhances.
+ Have an important relationship with manufacturing, marketing, finance, and other depts
,+ 4 approaches for logistics systems: materials management - physical distribution, cost
centres, nodes - links & channels.
● Council of Supply Chain Management Professionals
– The planning and management of all activities involved in sourcing and procurement,
conversion (transform raw material to finished products), and all logistics management
activities … also includes coordination with channel partners, which can be suppliers,
intermediaries, third-party service providers, and customers
● SC Network & Flow (4 main flows)
- Product flow:
+ Froward flow: Material flow: supplier – manufacturing – customer
+ Reverse flow: value generated from customer to the suppliers (revenue, data, feedback,
etc); order (customers order products from the retailer – distributors ask query from
brewer…
=> Each party in the process is the supplier-customer to each other until reaching the end-user.
- The information flow: a significant power flow
- Financial/ cash flow: faster cash-to-cash cycle/ order-to-cash cycle is better
,- Demand flow
- Definition: 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
- Supplier – manufacturing inbound logistics, which mainly concentrates on processing raw
material
- Outbound logistics: handle the final products to the end customer
- Reverse logistics: from customer to supplier (eg: when a customer receives a product with
an error -> make a claim to the retailer -> retailer sends that widget to the distributor…)
● 7 rights of SC: right product - quantity - condition - place - time - customer - cost
● Important elements of SCM (3)
- 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 – recognizing suppliers’ impact on reputation and carbon
footprint
● The major issues for consideration (11 concerns)
- Supply Chain Networks
+ The network facilities and supporting transportation are important
+ Increased complexity for organizations is a problem
+ Inventory Deployments
- Inventory duplication
- The bullwhip effect: small impact of one party can create greater influence on the others
- Collection and storage of vast amounts of data
- Cost/Value: Efficiency (cost) and effectiveness (value) prevention of sub-optimisation
- Organisational Relationships: Trade-offs and optimisation
- Performance Measurement: Why and how
- Technology: Challenge is to evaluate and successfully implement the technology
- Transportation Management: Right product, right time, right quantity, right quality, right
cost, the right destination
- Supply Chain Security: Concerns and potential challenges since 9/11
- Expanding the Supply Chain: Firms are expanding partnerships and building facilities in
foreign markets; Right shoring for maximum flexibility and minimum cost
- Increasing Supply Chain Responsiveness: shortage the time to deliver and wait for that
products
+ Firms will increasingly need to be more flexible and responsive to customer needs
+ Supply chains will need to benchmark industry performance and meet and improve on a
continuous basis
1. Overview
SCM: raw material (purchasing from the initial suppliers who provide input products –
procuring, sourcing, and buying) -> manufacturing products-> distributor -> wholesaler/
retailer (supermarket, convenience store,…) -> final customer
=> To understand the Q that the firm provides in the market, we have to get insight into the
market demand (final customer)
=> It is vital to have S = D (produce accurate Q of goods – production and operation mana)
2. Modern SCM & Complexities
● Institute for Supply Management
– The design and management of seamless, value-added processes across organizational
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
- SCs are an important element of capital consumption
+ Efficient & effective SC => free-up valuable resources, improve customer fulfillment
systems => increase ROI/ assets & improve shareholder value.
+ Need to focus on the end-users; be flexible & responsive
- Logistics is a vital part of SCM, which is also an area of management having 4 sub-
disciplines: business, military, service & event
+ adds place, time & quantity utilities to products & enhances.
+ Have an important relationship with manufacturing, marketing, finance, and other depts
,+ 4 approaches for logistics systems: materials management - physical distribution, cost
centres, nodes - links & channels.
● Council of Supply Chain Management Professionals
– The planning and management of all activities involved in sourcing and procurement,
conversion (transform raw material to finished products), and all logistics management
activities … also includes coordination with channel partners, which can be suppliers,
intermediaries, third-party service providers, and customers
● SC Network & Flow (4 main flows)
- Product flow:
+ Froward flow: Material flow: supplier – manufacturing – customer
+ Reverse flow: value generated from customer to the suppliers (revenue, data, feedback,
etc); order (customers order products from the retailer – distributors ask query from
brewer…
=> Each party in the process is the supplier-customer to each other until reaching the end-user.
- The information flow: a significant power flow
- Financial/ cash flow: faster cash-to-cash cycle/ order-to-cash cycle is better
,- Demand flow
- Definition: 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
- Supplier – manufacturing inbound logistics, which mainly concentrates on processing raw
material
- Outbound logistics: handle the final products to the end customer
- Reverse logistics: from customer to supplier (eg: when a customer receives a product with
an error -> make a claim to the retailer -> retailer sends that widget to the distributor…)
● 7 rights of SC: right product - quantity - condition - place - time - customer - cost
● Important elements of SCM (3)
- 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 – recognizing suppliers’ impact on reputation and carbon
footprint
● The major issues for consideration (11 concerns)
- Supply Chain Networks
+ The network facilities and supporting transportation are important
+ Increased complexity for organizations is a problem
+ Inventory Deployments
- Inventory duplication
- The bullwhip effect: small impact of one party can create greater influence on the others
- Collection and storage of vast amounts of data
- Cost/Value: Efficiency (cost) and effectiveness (value) prevention of sub-optimisation
- Organisational Relationships: Trade-offs and optimisation
- Performance Measurement: Why and how
- Technology: Challenge is to evaluate and successfully implement the technology
- Transportation Management: Right product, right time, right quantity, right quality, right
cost, the right destination
- Supply Chain Security: Concerns and potential challenges since 9/11
- Expanding the Supply Chain: Firms are expanding partnerships and building facilities in
foreign markets; Right shoring for maximum flexibility and minimum cost
- Increasing Supply Chain Responsiveness: shortage the time to deliver and wait for that
products
+ Firms will increasingly need to be more flexible and responsive to customer needs
+ Supply chains will need to benchmark industry performance and meet and improve on a
continuous basis
