Chapter 1 – The purchasing function in perspective DEFINE THE CONCEPT LOGISTICS (MAIN ELEMENTS) The part of SCM that plans, implements and controls the efficient, effective forward and reverse flow in storage of goods services and related information between the point of origin and point of consu...
Chapter 1 – The purchasing function in perspective
DEFINE THE CONCEPT LOGISTICS (MAIN ELEMENTS)
The part of SCM that plans, implements and controls the efficient, effective forward and reverse flow in
storage of goods services and related information between the point of origin and point of consumption in
order to meet customers’ requirements.
Your text here 1
Important activities included in logistics management are:
Traffic and transportation Warehousing
Inventory management The processing of returned goods.
Packaging and handling Customer service
Logistics is therefore strongly focused on the physical flow of material goods and services, with a
strong emphasis integrating all these activities so that the total cost in the logistics system is
minimized.
DEFINE THE CONCEPT SUPPLY CHAIN MANAGEMENT (SCM) (6 ELEMENTS)
SCM is a management philosophy aimed at integrating a network of upstream linkages, internal
linkages inside the organization and downstream linkages in performing specific processes and
activities.These will ultimately create value for the customer in the form of products and services.
MAIN DIFFERENCES BETWEEN LOGISTICS AND SUPPLY CHAIN MANAGEMENT (10) P20
Logistics Supply chain management (SCM)
It is a framework for the Uses the logistic framework and extends the
managment of all activities related concept of product, services and information flow
to material and information flows beyon the boundaries of the single orgnaisation to
within an organisation. other firms and entities through linkages, often of
The scope is the entire organisation an informal nature
It si the integration philosophy which seeks to
Can be regarded as a “functional optimise value added over the activities of many
silo” of a particular organisation organisations and specifically over ever-changing
combinations of firms and entities
It manages business processes across the
It manages business activiteis in functional and organisational boundaries of a
order to optimise customer service network of organisations, and aims at optimising
and to minimise cost for a customer satisfaction and eliminating activities and
particular organisation processes that add cost and not value over the
entire supply chain
The focus is on the management of
The focus is on the management of relationships
the flow of products, services and
across the entire supply chain
information
Logistic management focusses on SCM is aimed at optimising benefits for all
1
, optimising wealth for a single firm participants in the entire supply chain
Chapter 2 – The task of purchasing and supply
management
ADVANTAGES AND DISADVANTAGES OF CENTRALISED AND DECENTRALISED ORGANISATIONAL
STRUCTURES FOR PURCHASING AND SUPPLY MANAGEMENT
Type Advantages Disadvantages
of
struct
ure
1. Materials and products are standardised 1. There is a slow response time to regional
2. Negotiating power is increased and plants
volume discounts are made possible 2. There is resentment from geographically
3. Staff are afforded the opportunity of dispersed business unit management
becoming experts 3. There is a tendency to bypass the central
Centr 4. Control is improved buying office
alise 5. Administrative costs are reduced 4. There is less integration with user
d 6. Supplier relations are enhanced departments
7. Information systems integration is 5. Staff structure is top heavy
facilitated 6. There is lack of insight into the
8. Duplication of effort is eliminated requirements of dispersed plant units
1. There are better relations between 1. There is loss of economies of scale
decentralised purchasing and other 2. Suppliers are confused by dealing with
functions many offices
2. There is good service delivery to regional 3. There is duplication of staff and facilities
plants 4. Control over the function is much more
3. There is faster reaction time to user difficult
Dece departments in emergencies 5. There is a greater likelihood of
ntrali 4. Support of local suppliers generates communications breakdown
sed goodwill 6. There is focus on local units and under-
5. There is greater autonomy for profit emphasis on strategic issues
centres
6. Interdivisional competition can improve
purchasing performance
2
,
3
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