Summary
Summary OBS 210 notes
- Course
- OBS 210 (OBS210)
- Institution
- University Of Pretoria (UP)
OBS 210 notes for the semester, including chapters 1, 2, 4, 5, 7, 8, 9, 11, 13, 14
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Chapter 1: Introduction to Logistics and Supply Chain ManagementUnderstand and discuss the megatrends in supply chain management
The following are considered megatrends
Globalization
- Most significant factor that has changed business operations over recent years.
- Movement towards an integrated global economy, which has led to a more intense economic and geopolitical environment
The empowered consumer
- The internet allows customers to a wealth of information; thus, they are more empowered, educated, and informed than
ever before.
- Customers can compare prices, quality, and services very accurately.
Shift in global economic power
- Shift in the focus of global growth recently, the rebalancing is transforming BRICS countries (Brazil, Russia, India, and China)
from being sources of labor and production to consumption-focused economies.
- The direction of capital flow has changed as these countries have become exporters of innovation, capital, and talent.
Demographic shifts
- Explosive demographic growth in certain geographical areas and declines in others will more than ever contribute to
resource scarcity, shifts in economic power and drastic changes in societal norms.
- Trajectories differ among countries as some societies age rapidly, some grow exponentially, and others shrink.
Rise in technology
- Technology is a major force that is changing the dynamics of business. Consumers and businesses have access to seemingly
unlimited information at any time.
- Technology makes it possible to get information from anywhere in the world.
- Technology also opened the global economy for developing economies in the Far East and Africa.
COVID-19 pandemic
- Caused a highly disruptive and a serious challenge to conventional thinking and practice in supply chains.
- Sales of certain consumer goods and pharmaceuticals followed a highly erratic pattern and principles of forecasting in
inventory management changed overnight.
- Demand fulfilment became very difficult and emergency items, such as ventilators and distribution of vaccines, dominated
supply chains.
Climate change and resource scarcity
- The impact of climate change and scarcity of resources are of growing concern.
- The demand for energy and water continues to increase.
- The world is experiencing more extreme weather conditions and rising sea-levels. This may make farming, fishing, and
hunting impossible in some places.
Describe and differentiate between the different types of logistics
Different types of logistics:
Military logistics
Well known in the military environment and focuses on getting the right support to the right place at the right time. This includes
rations, ammunition, equipment, vehicles, spare parts, and medical services. Although the concepts used in managing military
logistics are like the other types, the deployment is very specific and is confined to the military to a large extent.
Engineering logistics
Refers to concepts such as integrated logistics support, life cycle analyses, system operation and support and maintenance
management.
Business logistics
The concept as applied in the commercial environment, as well as the supply and demand of raw materials and finished goods.
,Production logistics
Refers to the logistics that occur in the production environment: the phase between raw materials and finished products. The
concept excludes physical supply and distribution, but interfaces on the inbound side with material requirements planning (MRP) or
manufacturing resource planning (MRPID; and on the outbound side, with distribution requirements planning (DRP).
Reverse logistics
Refers to the need for activities such as handling return loads; disposal of packaging materials, obsolete products, and materials; as
well as the return (or recycling) of appliances, components, and equipment.
Construction logistics
Refers to the delivery of construction materials at the right time to the right place. Development in cities is never stagnant and there
will always be either new buildings or structures such as roads and other infrastructure projects that must be constructed, or old
buildings and structures that must be demolished and possibly replaced with newer developments.
City logistics
defined as moving freight from place of origin to destination in the most cost-effective way. This is done by integrating the
respective transport modes in the corridors of movement to, from, though, and within the city precinct in an integrated system of
links and nodes of freight terminals and distribution centers.
Humanitarian logistics
The concept of humanitarian logistics is not different from logistics or supply chain management business environment, which has
commercial supply chains, but the theatre of deployment is very different and implementation much more complicated because of
the scale and number of stakeholders involved. Humanitarian supply chains demonstrate peculiar characteristics which require
specific responses. The primary objective of humanitarian logistics activities is to alleviate the suffering of vulnerable people.
Define and discuss the concept of supply chain management
To operate successfully in today's volatile global business environment, firms need to become much more involved with their
suppliers and customers.
Many years ago, firms were vertically integrated, meaning that they owned some of their suppliers and/or customers. Today the
situation looks completely different, as firms sell business units or outsource many of their activities to build strategic partnerships
with other specialist firms that excel at what they do best.
This approach to conducting business is the ultimate way in which firms can remain competitive and is core to the practice of supply
chain management.
Supply chain management is the most recent term to be added to the field of logistics. It requires the control of a complex web of
organizations and operations.
Any firm, large or small, which aims to meet the needs of its various customers and stakeholders, will need resources in order to do
so; and will acquire many of its materials, equipment, facilities and supplies from other firms. The performance of a firm is
influenced to a greater or lesser extent by the actions of the firms that make up the supply chain.
,Explain and differentiate between the concepts of third-party and fourth party logistics:
Third-Party Logistics:
Third-party logistics (3PL) refers to the management
structure where a third party fulfils certain roles and
responsibilities regarding provision of logistics services
between the suppliers (first party) and the clients or
customers (second party). This is also known as contract
logistics or outsourcing, and is illustrated in figure 1.3
Types of 3PL service providers
- Transportation based
- Warehouse and distribution based
- Forwarder based
- Shipper/management based
- Finance based
- Information based
Fourth-Party Logistics:
The concept of fourth-party logistics (4PL) began to emerge roughly
in 1996.In essence this means that one company can outsource the
entire management of its supply chain to another company.
This would include all the assets, planning and management of the
process.
The 4PL provider gathers all the constituent parts required, such as
systems, transport providers, order management and inventory
management, with a view to providing the client with a fully
integrated supply chain.
In return the client pays an appropriate fee and concentrates on its
core business.
, Explain and discuss the concept of Porter’s value chain
Can be understood only by looking at a firm. Cost advantages and successful differentiation are found in the chain of activities that a
firm performs to deliver value to its customers. Advantage or disadvantage can occur during any one of five primary and four
secondary activities. Together, these activities form the value chain for every firm.
Primary activities includes the following
Inbound logistics
Includes activities such as receiving, storing, listing and grouping inputs to the product. Also included are functions such as materials handling,
warehousing, inventory management, transportation scheduling and managing suppliers.
Operations
Include machining, packaging, assembly, maintenance of equipment, testing, operational management, and so on.
Outbound logistics
Refers to such activities as order processing, warehousing, scheduling transportation and distribution management.
Marketing and sales
Are activities that make or convince buyers to purchase the company's products. Included are advertising, promotion, selling, pricing, channel
selection, retail management, and so on.
Service
Has to do with maintaining the product after sale, thus guaranteeing quality and/or adding value in other ways, such as through installation, training
servicing, providing spare parts or upgrading. Service enhances the product value and also allows for after-sales (commercial) interaction with the
buyer.
Secondary activities
- Porter (1985) refers to procurement as a secondary activity, although many procurement professionals would argue that it is (at least partl
a primary activity. In this book we see procurement as a driving force in the value and supply chain. Included are activities such as purchasin
raw materials, servicing, supplies, negotiating contracts with suppliers, securing building leases, and so on.
- With technology development, Porter (1985) refers to such activities as R&D, product and/or process improvements, (re)design,
developing new services, and so on.
Human resource management
Includes recruitment and education, as well as compensation, employee retention and other means to fully capitalize on human resources.
The firm's infrastructure, such as general management, planning procedures, finance, accounting, public affairs, and quality management, can make
the difference between success and - despite the best intentions in the world - failure.
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