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Supply Chain Management A Logistics Approach

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1 Supply Chain Management A Logistics Approach
COURSE FACILITATOR Muhammad Tariq Yousafzai Assistant Professor MS in Innovation and Business Creation MBA Imsciences (Distinction Holder)

2 Role of Logistics in Supply Chains
Session Objectives Understand the role and importance Of logistics Types of logistics utilities Five types of Utility Value added role of Logistics Logistics and functional departments interface Role of Logistics in Supply Chains Approaches to Analyzing logistics systems

3 Logistics (From Customer Perspective)
Getting the right product, to right customer, in the right quantity, in right condition, at right Place, at right time, & at right cost Also called the “Seven Rs of Logistics”

4 Logistics Defined “Logistics is the process of anticipating customer needs and wants; Acquiring the capital, materials, people, technologies, and information necessary to meet these wants and needs; Optimizing the goods or service-producing network to fulfill customer requests; And utilizing the network to fulfill customer requests in a timely manner”

5 Four Sub divisions of Logistics
Business logistics (flow and storage of goods, service and related information from point of origin to point of consumption) Military Logistics (support operation capability such as in Operation Rah-e-Rast in Swat and Rah-e-Nijat) (food, fuel, spare parts) as well as personnel and ensure readiness, reliability, & efficiency)

6 Event logistics: The network of activities, facilities, & personnel required to organize, schedule, & deploy the resources for an event to take place & to efficient withdraw after the event Such as Huner Mela by SDC or IMS welcome part last week or Valentine Day for Chocolate candy industry and cut flowers

7 Service Logistics The acquisition, scheduling, & management of the facilities/assets, personnel, & materials to support & sustain a service operation or business.

8 Value-Added Roles of Logistics
Five Types of Utilities add value to a product or service Form Utility (Mftg or assembly process) Time Utility (Reducing lead time & JIT inventory control) Place Utility (Primarily via transportation) Quantity Utility (Suzuki Mehran example) Possession Utility (created via marketing)

9 Manufacturing or assembly process For example: Dell (change of form)
Form Utility Manufacturing or assembly process For example: Dell (change of form) Breaking bulk Place Utility: Logistics create place utility mainly through transportation

10 Time Utility Heavy advertising Reducing lead time (JIT)
The time that elapses from when a customer places an order until the customer receives a satisfactory fulfillment of orders. (Bad butter)

11 Quantity Utility “When” and “ Where” should be accompanied by “How much” Mehran Motors assembling 1000 cars in a day, the tire supplier should provide 4000, tires be delivered What if the supplier provides 200 tires

12 Possession Utility AIDA concept (desire issue)
The role of logistics in the economy depends on the existence of possession utility, for time, place and quantity utilities make sense only if demand for the product or service exists


14 Logistics Activities (1) Transportation (2) Warehousing and Storage
(3) Industrial Packaging (4) Materials Handling (5) Inventory Control (6) Order Fulfillment (7) Demand Forecasting (8) Production Scheduling

15 Logistics activities continued…
(9) Procurement (10) Customer Service (11) Facility-Location (12) Return Goods Handling (13) Parts and Service Support (14) Salvage and Scrap Disposal These activities and now explained one-on- -one basis

16 (1) TRANSPORTATION Important activity in logistics and often the largest variable cost Global Transportation options are -- OCEAN Accounting for two thirds of all international movements, low rates, long transit times (slow speed), low accessibility and higher potential for shipment damage. --

17 OCEAN Normally, containers are used
“FCL” stands for Full Container Load and “LCL” stands for Less than Container Load FCL is door-to-door concept LCL is terminal-to-terminal concept

18 AIR FREIGHT Fast Transit Time, High Rates
Suitable for High value Low Density For Example: Diamonds, Time sensitive documents, spare parts etc Mostly “Belly Cargo” Less/Convenient Packaging Lower Insurance

19 MOTOR If the transit distance is less than 1,000 km using road freight is competitive compared to rail and airfreight Widely used in the inland delivery of goods to port of export The delivery charge is called the cartage or trucking fee

20 Continued… Oresund Bridge Between Sweden and Denmark (Malmo –Copenham)
7,455 Meters Long

21 RAIL Different track gauges in various countries prevent long-distance shipments For example, a shipper using a land bridge substitutes land transportation for part of containers ocean voyage, taking several days off the transit time and saving in-transit inventory costs.

22 Logistics Activities… STORAGE
Tradeoff relationship with transportation Involves two steps (a) Inventory management and (b) Warehousing (not a long term storage facility anymore) Slow mode (higher inventory) and greater warehousing space

23 Packaging Depends on the goods to be sent, method of dispatch and conditions at final destination. Premium transportation reduces packaging costs (oftentimes) If several transfers are involved? Breaking down heavy packages

24 Packaging continued.. Desiccants (drying agents) Waxed paper and
Laminated foil may be required in areas with high humidity levels Pallets are good for stackable items Standard Euro pallet 120X80 cm and US Palllets have 120X100cm dimensions

25 Materials Handling Important for warehouse design and efficient warehouse operations Concerned with materials handling equipment used for short-distance movement and includes equipment Example: Conveyors, forklift trucks, overhead cranes Minimize aisle space, reduce cost, labor, and risk

26 Automated Storage and Retrieval Systems (ASRS)

27 Inventory Control In warehouse and Manufacturing Facility
Inventory has two dimensions (a) Assuring adequate inventory levels (b) Certifying inventory accuracy Fixed order quantity approach (filling) Two bin system To find out whether or not adjustments are needed? These impact order fulfillment (buffer stock) VMI JIT and MRP are mostly used for dependent demand, and EOQ for independent demand where demand is known and no inventory is in transit

28 Order fulfillment Order fulfillment 8 days Order processing 4 days
Order preparation 2 days Transportation 2 days Reduce activity 2 and use a slow mode of transportation Front desk operations should be supported by back end operations via coordination among, inventory control, manufacturing, warehousing, and transportation

29 Forecasting Accurate forecasting of inventory requirements and material components is essential to inventory control, manufacturing efficiency, and customer satisfaction. JIT, and MRP The above two are used as demand is depended on demand of something else.

30 Production planning Closely related to forecasting Production managers
Multiple product line, product line? Seasonality of business NEW BUY REBUY MODIFIED BUY

31 Procurement Transportation costs directly related to procurement
Total logistics costs (inventory and transportation) Buying from china would have a lead time of several weeks Premium mode of transportation needed

32 Kraljics Matrix Its purpose is to help purchasers maximize supply security and reduce costs, by making the most of their purchasing power. In doing so, procurement moves from being a transactional activity to a strategic activity – because, as Kraljic said, "purchasing must become supply management."


34 Non Criticals– Office supplies such as stationery (Rethink)
Strategic Items– (Special branded clothes such as Bonanza) who use their own fabric and do not sell others (long Term) Bottlenecks– Uranium for a nuclear plant (supplier will provide what they sell not what you like but what they sell) Leverage Items Leverage items- (Control) Low supplier with high profile customer

35 Facility location Plant and warehouse location
A site change can alter time and place relationships Such changes affects transportation costs and service, inventory requirements

36 Pipeline Pipeline routes are practically unlimited as they can be laid on land or under water. The longest gas pipeline links Alberta to Sarnia (Canada), which is 2,911 km in length. Pipeline construction costs vary according to the diameter and increase proportionally with the distance and with the viscosity of fluids (from gas, low viscosity, to oil, high viscosity).

37 Logistics interfaces with operations
Relates to the length of production runs Manufacturing economies concerned with long production runs with infrequent manufacturing line changeovers Tradeoffs between (High inventory costs and Limited supplies of others) Chocolate candy on valentine day A shift of responsibility from manufacturing to logistics

38 logistics Interface With Marketing
Logistics is sometimes referred to as other half of marketing The several {Rs} Place dimension Organizations dealing with wholesalers probably have less logistics problems Larger quantities, manage inventories periodically Retailers buy in small amounts, and do not allow for sufficient lead time Manufacturers might need to buy a premium transportation service

39 P Product Size, Shape, Weight, Packaging and other dimensions affect the ability of logistics system to move and store products Logistics should offer input into NPD Frequent refurbishing The nature of the product can damage rate,storage ability, pallets etc IKEA transportation improvements

40 Promotion Your promotions affects demand and demand affects manufacturing, logistics and so on

41 Thank You!

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