Logistics and Supply Chain
Management
Main text book:
• Logistics: An Introduction to Supply Chain Management, Donald
Waters (LM)
• Supply Chain Management (VDO)
Supplementary text books:
• Operation Management: Creating Value Along The Supply Chain,
7th edition, Russell and Taylor (OM)
• Inventory Control and Management, 2nd edition, Donald Waters
(IM)
• Logistics Management and Strategy: Competing through the
supply chain, 3rd edition, Alan Harrison & Remko van Hoek (LMS)
Assessment
Attendance and Assignment 20%
Mid-term 40%
Final 40%
A >= 80.0
B+ 75.0 – 79.99
B 70.0 – 74.99
C+ 65.0 – 69.99
C 60.0 – 64.99
D+ 55.0 – 59.99
D 50.0 – 54.99
F < 50.0
Assessment
• The score for class missing will be reduced by 2 points
of the total 100 points. If you attend a class later than 5
and 30 minutes, your attending score will be reduced
by 1 point and 2 points, respectively.
• Assignment late due:
– (1) within 1 day (24 Hr) will be reduced to 75%
– (2) before 14 days will be reduced to 50%
– (3) after 14 days will be reduced to 25%.
• Copy part(s) of assignment will be reduced your score
by divided by the person(s) who share the same copy.
• To assign a grade, the score will not be rounded up.
Course outline
1. The Context of Logistics
2. Integrating the Supply Chain
3. Logistics Strategy
4. Implementing the Strategy
5. Locating Facilities
6. Planning Resources
7. Controlling Material Flow
Course outline
7. Measuring and Improving Performance
8. Procurement
9. Inventory Management
10.Warehousing and Material Handling
11.Transportation
12. Global Logistics & Logistics Future
Challenges
The Context of Logistics
Aims:
• Define ‘logistics’ and associated terms
• Understand the role and structure of supply chains
• List different activities of logistics and understand the
relationships between them
• Discuss the aims of logistics
• Show how logistics contributes to customer satisfaction
• Recognise the importance of logistics to every
organisation
Materials are all the things that an organisation moves
to create its products. These materials can be both
tangible (such as raw materials) and intangible (such as
information).
“All organisations move materials”
True or False?
Spectrum of products
Operations creating outputs
Definitions
• Materials are all the things that an
organisation moves to create its products.
These materials can be both tangible (such as
raw materials) and intangible (such as
information).
• A process/operation: transforms inputs in the
form of materials and information into
outputs in the form of goods and services.
Logistics and Supply Chain Management
The role of logistics
Definitions and concepts
• Logistics is the function responsible for the flow
of materials from suppliers into an organisation,
through operations within the organisation, and
then out to customers. (Walters, 2003)
• Logistics is the process of planning,
implementing, and controlling procedures for the
efficient and effective transportation and storage
of goods including services, and related
information from the point of origin to the point
of consumption for the purpose of conforming to
customer requirements. (Council of Supply Chain
Management Professionals , CSCMP)
Definitions and concepts
• A supply chain is a network of partners who
collectively convert a basic commodity
(upstream) into a finished product (downstream)
that is valued by end-customers, and who
manage returns at each stage. (Harrison, 2008)
• A supply chain consists of the series of activities
and organisations that materials move through
on their journey from initial suppliers to final
customers.
Supply chain for paper
Assignment
• Individually, choose a typical product.
• Draw the supply chain/network of the
selected product in 1 page of an A4
paper.
Definitions and concepts
• The definition of logistics management: The task
of coordinating material flow and information
flow across the supply chain. (Harrison, 2008)
• The definition of supply chain management:
planning and controlling all of the business
processes – from end-customer to raw material
suppliers – that link together partners in a supply
chain in order to serve the needs of the endcustomer.
(Harrison, 2008) Example SCM
Council of Supply Chain Management Professionals (CSCMP):
• "Logistics management is that part of supply chain
management that plans, implements, and controls the
efficient, effective forward and reverse flow and storage of
goods, services, and related information between the point
of origin and the point of consumption in order to meet
customers' requirements.
• Logistics management activities typically include inbound
and outbound transportation management, fleet
management, warehousing, materials handling, order
fulfillment, logistics network design, inventory management,
supply/demand planning, and management of third party
logistics services providers.
Definition of Logistics management
Council of Supply Chain Management Professionals (CSCMP)
(Cont.):
• To varying degrees, the logistics function also includes
sourcing and procurement, production planning and
scheduling, packaging and assembly, and customer service.
• It is involved in all levels of planning and execution-strategic,
operational, and tactical.
• Logistics management is an integrating function which
coordinates and optimizes all logistics activities, as well as
integrates logistics activities with other functions, including
marketing, sales, manufacturing, finance, and information
technology."
Definition of Logistics management
Council of Supply Chain Management Professionals
(CSCMP):
• "Supply Chain Management encompasses the planning
and management of all activities involved in sourcing and
procurement, conversion, and all logistics management
activities.
• Importantly, it also includes coordination and
collaboration with channel partners, which can be
suppliers, intermediaries, third-party service providers,
and customers. In essence, supply chain management
integrates supply and demand management within and
across companies.
Definition of Supply Chain Management
Council of Supply Chain Management Professionals
(CSCMP) (Cont.):
• Supply Chain Management is an integrating function with
primary responsibility for linking major business
functions and business processes within and across
companies into a cohesive and high-performing business
model.
• It includes all of the logistics management activities
noted above, as well as manufacturing operations, and it
drives coordination of processes and activities with and
across marketing, sales, product design, finance and
information technology."
Definition of Supply Chain Management
Definitions and concepts
• People use different names for these chains of
activities and organisations.
• When they emphasise the operations, they refer
to the process; when they emphasise marketing,
they call it a logistics channel; when they look at
the value added, they call it a value chain, when
they see how customer demands are satisfied,
they call it a demand chain. Here we are
emphasising the movement of materials and will
use the most general term of supply chain.
Supply chain: structure and tiering
Supply network
Other terms
• Purchasing and supply deals with a focal firm’s
immediate suppliers (upstream).
• Physical distribution deals with the task of
distributing products to tier 1 customers
(downstream).
• Logistics refers to management of materials and
information. Inbound logistics deals with links
between the focal firm and its upstream (‘buy
side’) suppliers, while outbound logistics refers to
the links between the focal firm and its
downstream (‘sell side’) customers.
Benefits of supply chains
• Producers locate operations in the best locations,
regardless of the locations of their customers.
• By concentrating operations in large facilities,
producers can get economies of scale.
• Producers do not keep large stocks of finished
goods, as these are held further down the supply
chain nearer to customers.
• Wholesalers place large orders, and producers
pass on lower unit costs in price discounts.
Benefits of supply chains
• Wholesalers keep stocks from many suppliers, giving
retailers a choice of goods.
• Wholesalers are near to retailers and have short lead
times.
• Retailers carry less stock as wholesalers provide
reliable deliveries.
• Retailers can have small operations, giving a responsive
service near to customers.
• Transport is simpler, with fewer, larger deliveries
reducing costs.
• Organisations can develop expertise in specific types of
operation.
Benefits of supply chains
Activities of Logistics
• Procurement or purchasing
• Inward transport or traffic
• Receiving
• Warehousing or stores
• Stock control
• Order picking
• Materials handling
• Outward transport
• Recycling, returns and waste disposal
• Location
• Communication
Activities of Logistics
• Many other activities can be included in logistics.
Sometimes an organisation might include sales
forecasting, production scheduling, customer
service management, overseas liaison, third party
operations, and so on.
• The important point is not to draw arbitrary
boundaries between functions, but to recognise
that they must all work together to get an
efficient flow of materials.
Organising logistics
Aim of Logistics Managers
• To move materials into, through, and out of
their own organisation as efficiently as
possible.
• To contribute to an efficient flow through the
whole supply chain.
What exactly do we mean by ‘efficient’?
What exactly do we mean by ‘efficient’?
• fast deliveries
• low costs
• little wastage
• quick response
• high productivity
• low stocks
• no damage
• few mistakes
• high staff morale
• and so on
Aim of Logistics
• The aim of logistics as getting, ‘the right
materials, to the right place, at the right time,
from the right source, with the right quality, at
the right price’. Example
• The overall