Chapter 1: Introduction
Introduction
Logistics is about the flow 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. It is the network of all entities involved in producing and delivering a finished product to the
final customer
This is the supply chain
There are different flows and steps
In the reverse flow of products the products go from customer to supplier. There are different reasons: the
product is broken (production flaw) or it was an online order and the customer doesn’t like it
Most products that are returned are usually thrown away. Returned products cost a lot of money, this is a
reason for not review it and just throwing away
Manufacturer is the one that releases the final product → brand that we know → hp
Downstream is from left to right, upstream is from right to left
Everything left from the manufacturer is inbound (all things coming in from the supplier). Everything right
from the manufacturer is outbound (everything going 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 sells the product to more party’s, not just one. We speak of a
supply network
You can’t separate them from each other. It is more a network than a chain. A company can have a different
role/function in different supply chains. because the final customer is impart, we call it a demand chain
Supply chain: how should it look?
Each SC is different. The structure depends on:
- (Corporate) strategy
- Type of goods
- Type of demand
- …
The customer can’t expect from a company to have every product in every color available. It must be
produced when you buy it. You have to make different design choices for your supply chain
- Inbound/supply side
- Selection of suppliers: which/how many/…
- For example: companies close by or more far away
- Manufacturing
- Where/how many locations
- Very close to the customer and expensive or far away but cheap?
- Outsourcing?
- Outbound/distribution side:
1
, - Type of distribution channels?
- Intermediary parties
- Number and location of distribution centers?
- How to handle reverse flows?
Companies now use multiple distribution channels. In the past there was only single channel but now almost
every company also has an online version. That makes it multi channel
With omni channel there is an mix between the online and physical channels. As customer you don’t see the
difference between them anymore, you see it as a single distribution channel. For a customer this is easy,
but the logistic behind it is difficult
Supply chain management (SCM)
Supply chain management: Design and management 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 for example
- 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 that happen that causes things to not be on
time. This gives uncertainty. Some companies make safety stocks. This makes you more reliable, but it costs
more
- Uncertainty is unavoidable
- Many sources
- Safety stocks
- Relationship management → good relationships are more important in your SC
2
,The boundary spanning nature of SCM
The relationship management and the coordination are also important. There are 2 forms
Intra-organisational: 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
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 equal will it 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 may help with this
Service supply chains
There are differences between services and products. Customers buy more services than products
3
, What is the main difference between products and services?
- Services are intangible. The consequence is that you can’t keep an inventory. You must have the
capacity to produce service when it is asked. You can’t test a service. You can produce a product
and keep it in inventory and you can test it
- 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 services
Almost any product is a combination of goods and services
Operations management & logistics
Operations management: Planning, scheduling and control of the manufacturing and service processes
that are used to transform the resourced 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
- 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 customer’s 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
Chapter 2: Strategy
Supply chain 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 tis 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. You have
sustainability but also social aspects. These three things we
call the triple bottom line
4
Introduction
Logistics is about the flow 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. It is the network of all entities involved in producing and delivering a finished product to the
final customer
This is the supply chain
There are different flows and steps
In the reverse flow of products the products go from customer to supplier. There are different reasons: the
product is broken (production flaw) or it was an online order and the customer doesn’t like it
Most products that are returned are usually thrown away. Returned products cost a lot of money, this is a
reason for not review it and just throwing away
Manufacturer is the one that releases the final product → brand that we know → hp
Downstream is from left to right, upstream is from right to left
Everything left from the manufacturer is inbound (all things coming in from the supplier). Everything right
from the manufacturer is outbound (everything going 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 sells the product to more party’s, not just one. We speak of a
supply network
You can’t separate them from each other. It is more a network than a chain. A company can have a different
role/function in different supply chains. because the final customer is impart, we call it a demand chain
Supply chain: how should it look?
Each SC is different. The structure depends on:
- (Corporate) strategy
- Type of goods
- Type of demand
- …
The customer can’t expect from a company to have every product in every color available. It must be
produced when you buy it. You have to make different design choices for your supply chain
- Inbound/supply side
- Selection of suppliers: which/how many/…
- For example: companies close by or more far away
- Manufacturing
- Where/how many locations
- Very close to the customer and expensive or far away but cheap?
- Outsourcing?
- Outbound/distribution side:
1
, - Type of distribution channels?
- Intermediary parties
- Number and location of distribution centers?
- How to handle reverse flows?
Companies now use multiple distribution channels. In the past there was only single channel but now almost
every company also has an online version. That makes it multi channel
With omni channel there is an mix between the online and physical channels. As customer you don’t see the
difference between them anymore, you see it as a single distribution channel. For a customer this is easy,
but the logistic behind it is difficult
Supply chain management (SCM)
Supply chain management: Design and management 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 for example
- 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 that happen that causes things to not be on
time. This gives uncertainty. Some companies make safety stocks. This makes you more reliable, but it costs
more
- Uncertainty is unavoidable
- Many sources
- Safety stocks
- Relationship management → good relationships are more important in your SC
2
,The boundary spanning nature of SCM
The relationship management and the coordination are also important. There are 2 forms
Intra-organisational: 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
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 equal will it 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 may help with this
Service supply chains
There are differences between services and products. Customers buy more services than products
3
, What is the main difference between products and services?
- Services are intangible. The consequence is that you can’t keep an inventory. You must have the
capacity to produce service when it is asked. You can’t test a service. You can produce a product
and keep it in inventory and you can test it
- 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 services
Almost any product is a combination of goods and services
Operations management & logistics
Operations management: Planning, scheduling and control of the manufacturing and service processes
that are used to transform the resourced 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
- 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 customer’s 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
Chapter 2: Strategy
Supply chain 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 tis 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. You have
sustainability but also social aspects. These three things we
call the triple bottom line
4
