1. Introductie tot logistics en supply chain management + supply chain strategy (1+2)
1.1 Introduction
Logistics is about the flow from products to customers
The Supply Chain is the linking of things, it is the chain of networks or companies that links the supplier with
the customer
This is the supply chain. There are different flows and
steps
Reverse flow of products: products go from customer to supplier. Reasons: product is broken (production
flaw) or the customer doesn’t like it
Most of the products that are returned are usually thrown away. Returned products cost a lot of money, this is
a reason for not reviewing it and just throwing it away
Downstream: left to right, upstream: right to left
Inbound: everything left from the manufacturer (all things coming from the supplier)
Outbound: everything right from the manufacturer (everything going out to the customer)
There is a whole chain of companies involved in making sure that the customer gets the final product.
Suppliers also have suppliers. A company doesn’t sell the product to just one company but to more. We
speak now of a supply network.
A company can have a different role/function in different supply chains. So it’s more complicated than the
figure above. Because the final customer is so important, we call it a demand chain.
Every supply chain is different. The structure depends on:
- (Corporate) strategy
- Type of goods
- Type of demand
- …
You can’t expect from a company to have every product in every color available. It must be produced when
you buy it. A company has to make different design choices for its supply chain
- Inbound/supply side:
- Selection of suppliers: which, how many, …
- Companies close by or more far away
- Manufacturing:
- Where/how many locations? → close to the customer and expensive or cheaper but far
away
- Outsourcing?
- Outbound/distribution side:
- Type of distribution channels?
- Intermediary parties?
- Number and location of distribution centers?
- How to handle reverse flows?
1
,Omni channel strategy
With omni channel there is a mix between online and
physical channels. A customer doesn’t see the difference
between them, they see it as a single distribution
channel. For a customer this is easy, but the logistics
behind it is difficult.
Supply Chain Management (SCM): “Design and management of flows of products, information and funds
throughout the supply chain”
The goal is to maximize customer value and achieve a sustainable competitive advantage
Key aspects:
- Customer focus (final customer)
- Driving force
- Value chain/network (cfr. Porter), demand chain
- “Pulls” products through the SC
- Coordination of movement of goods
- Information sharing
- Collaboration
What makes a SC competitive?
- Responsiveness/agility → the SC must be able to react fast to changes in the economy
- Move quickly to meet changing customer demands
- More important than long-term strategy?
- Reliability → there is a lot of uncertainty in the SC. A lot of things happen that causes things to not
be on time. This gives uncertainty. A company can make safety stocks. There are more reliable but it
also costs more
- Uncertainty is unavoidable
- Many sources
- Safety stocks
- Relationship management
The boundary spanning nature of SCM
The relationship management and the coordination are also important. There are 2 forms:
1. Intra-organisational
2
, This is in the company itself
- Sourcing department: buying all components from different suppliers
- Marketing department: contact with the customer
- Operation: organizes the transformation of raw materials into finished goods
Every department works in a functional silo. They work separately
without discussing. They should be looking at what is best for the
company in his whole
2. Cross-organisational
The ultimate goal in a SC should be working together to have the best product for the best price for
the customer. It could be that your supplier is also the supplier of your rival, how fair will that be?
You have adversarial relationships, but that shouldn’t be the way. You should do relationship
management to have a good SC
You want your SC to be an ‘extended enterprise’. The goal is to function as one entity. This is difficult
due to the complexity of the SC. IT can help a little with this
Service supply chains
There is a difference between products and services. Customers buy more services. Most of what we
discuss will be about products, but some can be applied to services.
What is the main difference between products and services?
- Services are intangible. You can’t keep an inventory. You must have the capacity to produce service
when it is asked. A product you can produce and keep in inventory
- Interaction with customers. With service you have direct contact with the manufacturer, with products
it’s not always like that (there are a lot of intermediate parties)
- Heterogeneous
- Perishable and time dependent
- Package of feature
- There is no reverse flow of product
Operations management & logistics
Operations management: Planning, scheduling and control of the manufacturing and service processes
that are used to transform resources employed by a firm into products desired by customers
Logistics (flow of products between companies)
- “Business function responsible for transporting and delivering products to the right place at the right
time throughout the SC”
3
, - “The process of planning, implementing and controlling the efficient (forward and reverse) flow and
storage of raw materials, in-process inventory, finished goods, services, and related information from
point of origin to point of consumption in order to meet customers requirements”
- “To make sure that the right quantity is at the right place, on the right time, with the right quality, and
at the right cost”
1.2 Strategy
(Corporate) Strategy
- How a company intends to create and sustain value for its shareholders
- Plan that defines:
- The company’s long-term goals
- How it plans to achieve those goals
- The way the company plans to differentiate itself from its competitors
Operations & supply chain strategy
The setting of broad policies and plans that will guide the use of the resources needed by the firm to
implement its corporate strategy
Strategic alignment
The triple bottom line
When we think about strategy, we first think about revenue. The
economic aspect is very important. The last couple of years other
things have also become important. There is sustainability but also
social aspects. These three things are called the triple bottom line
A competitive advantage: sure, but how?
The main goal is to have a competitive advantage. You want customers to buy your product
- Cost advantage vs. value advantage → you can try to be the cheapest for certain products. This is
important because when you look at certain markets, you see that customers buy the cheapest
product. The disadvantage is that there is a lot of competition and in the end there is only one
company that is the cheapest
- Competitive dimensions/priorities
- Cost
- Quality → some companies want to make sure that the quality (value of the product) is
ensured. Customers are then willing to pay more. You can do this by having the best quality,
a better feature and a better life expectancy
- Delivery speed
- Delivery reliability
- Coping with changes in demand
- Flexibility and new-product introduction speed
- Support/service
4
1.1 Introduction
Logistics is about the flow from products to customers
The Supply Chain is the linking of things, it is the chain of networks or companies that links the supplier with
the customer
This is the supply chain. There are different flows and
steps
Reverse flow of products: products go from customer to supplier. Reasons: product is broken (production
flaw) or the customer doesn’t like it
Most of the products that are returned are usually thrown away. Returned products cost a lot of money, this is
a reason for not reviewing it and just throwing it away
Downstream: left to right, upstream: right to left
Inbound: everything left from the manufacturer (all things coming from the supplier)
Outbound: everything right from the manufacturer (everything going out to the customer)
There is a whole chain of companies involved in making sure that the customer gets the final product.
Suppliers also have suppliers. A company doesn’t sell the product to just one company but to more. We
speak now of a supply network.
A company can have a different role/function in different supply chains. So it’s more complicated than the
figure above. Because the final customer is so important, we call it a demand chain.
Every supply chain is different. The structure depends on:
- (Corporate) strategy
- Type of goods
- Type of demand
- …
You can’t expect from a company to have every product in every color available. It must be produced when
you buy it. A company has to make different design choices for its supply chain
- Inbound/supply side:
- Selection of suppliers: which, how many, …
- Companies close by or more far away
- Manufacturing:
- Where/how many locations? → close to the customer and expensive or cheaper but far
away
- Outsourcing?
- Outbound/distribution side:
- Type of distribution channels?
- Intermediary parties?
- Number and location of distribution centers?
- How to handle reverse flows?
1
,Omni channel strategy
With omni channel there is a mix between online and
physical channels. A customer doesn’t see the difference
between them, they see it as a single distribution
channel. For a customer this is easy, but the logistics
behind it is difficult.
Supply Chain Management (SCM): “Design and management of flows of products, information and funds
throughout the supply chain”
The goal is to maximize customer value and achieve a sustainable competitive advantage
Key aspects:
- Customer focus (final customer)
- Driving force
- Value chain/network (cfr. Porter), demand chain
- “Pulls” products through the SC
- Coordination of movement of goods
- Information sharing
- Collaboration
What makes a SC competitive?
- Responsiveness/agility → the SC must be able to react fast to changes in the economy
- Move quickly to meet changing customer demands
- More important than long-term strategy?
- Reliability → there is a lot of uncertainty in the SC. A lot of things happen that causes things to not
be on time. This gives uncertainty. A company can make safety stocks. There are more reliable but it
also costs more
- Uncertainty is unavoidable
- Many sources
- Safety stocks
- Relationship management
The boundary spanning nature of SCM
The relationship management and the coordination are also important. There are 2 forms:
1. Intra-organisational
2
, This is in the company itself
- Sourcing department: buying all components from different suppliers
- Marketing department: contact with the customer
- Operation: organizes the transformation of raw materials into finished goods
Every department works in a functional silo. They work separately
without discussing. They should be looking at what is best for the
company in his whole
2. Cross-organisational
The ultimate goal in a SC should be working together to have the best product for the best price for
the customer. It could be that your supplier is also the supplier of your rival, how fair will that be?
You have adversarial relationships, but that shouldn’t be the way. You should do relationship
management to have a good SC
You want your SC to be an ‘extended enterprise’. The goal is to function as one entity. This is difficult
due to the complexity of the SC. IT can help a little with this
Service supply chains
There is a difference between products and services. Customers buy more services. Most of what we
discuss will be about products, but some can be applied to services.
What is the main difference between products and services?
- Services are intangible. You can’t keep an inventory. You must have the capacity to produce service
when it is asked. A product you can produce and keep in inventory
- Interaction with customers. With service you have direct contact with the manufacturer, with products
it’s not always like that (there are a lot of intermediate parties)
- Heterogeneous
- Perishable and time dependent
- Package of feature
- There is no reverse flow of product
Operations management & logistics
Operations management: Planning, scheduling and control of the manufacturing and service processes
that are used to transform resources employed by a firm into products desired by customers
Logistics (flow of products between companies)
- “Business function responsible for transporting and delivering products to the right place at the right
time throughout the SC”
3
, - “The process of planning, implementing and controlling the efficient (forward and reverse) flow and
storage of raw materials, in-process inventory, finished goods, services, and related information from
point of origin to point of consumption in order to meet customers requirements”
- “To make sure that the right quantity is at the right place, on the right time, with the right quality, and
at the right cost”
1.2 Strategy
(Corporate) Strategy
- How a company intends to create and sustain value for its shareholders
- Plan that defines:
- The company’s long-term goals
- How it plans to achieve those goals
- The way the company plans to differentiate itself from its competitors
Operations & supply chain strategy
The setting of broad policies and plans that will guide the use of the resources needed by the firm to
implement its corporate strategy
Strategic alignment
The triple bottom line
When we think about strategy, we first think about revenue. The
economic aspect is very important. The last couple of years other
things have also become important. There is sustainability but also
social aspects. These three things are called the triple bottom line
A competitive advantage: sure, but how?
The main goal is to have a competitive advantage. You want customers to buy your product
- Cost advantage vs. value advantage → you can try to be the cheapest for certain products. This is
important because when you look at certain markets, you see that customers buy the cheapest
product. The disadvantage is that there is a lot of competition and in the end there is only one
company that is the cheapest
- Competitive dimensions/priorities
- Cost
- Quality → some companies want to make sure that the quality (value of the product) is
ensured. Customers are then willing to pay more. You can do this by having the best quality,
a better feature and a better life expectancy
- Delivery speed
- Delivery reliability
- Coping with changes in demand
- Flexibility and new-product introduction speed
- Support/service
4
