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Supply chain management Summary
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Great summary for passing your supply chain exam
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WEEK 1:Supply Chain:
The network of all the individuals, organisations, resources, activities and technology involved in
the creation and sale of a products, form the delivery of source materials form the supplies to the
manufacturer, through to its eventual delivery to the end user.
Supply Chain Management:
The management of upstream and downstream relationships with suppliers and customers to deliver
superior value at less cost to the supply chain as a whole
Why Study Supply Chain?
Even if i may not want to pursue this topic within business…
- Inventory are up to 70% of a company’s costs
- Supply chain manages inventory, but Sales and Marketing are closely involved with demand
planning (forecasts)
- Sales and Marketing create demand, but supply chain makes the product available
- How can you manages, function or communicate effectively within a company if you don’t
understand who does what in it?
What is logistics?
A part of supply chain, but more than just transportation of goods….
The history of modern logistics.
The modern interpretation of logistics has its origins in military operations, where it was used to
describe the activities related to the efficient and effective distribution and storage of supples and
personnel.
Defining “Logistics”:
Logistics is about….
- Meeting the requirements of the customers
- Using a process perspective
- In most efficient manner
SCM A-Cluster Summary 1
,—
Logistics: A Process Perspective
That part of supply chain management that plan, implements and controls:
- The efficient and effective storage and forward and reverse flow
- Of goods, services and related information
- Between the point of origin and the point of consumption
- In order to meet customers requirements
—
Logistics: A Process Perspective
↓
A process is a series of operation to a end goal. In this case we are going to consider 5 main
characterises.
↓
Characteristics Logistics Process:
1. Supplier(s) and customer(s)
SCM A-Cluster Summary 2
,2. Input and Output
3. Transformation (somewhere in the middle that includes interrelated steps/activities)
4. Interrelated steps/ activities
5. Repetitive
↓
Indeed, a process is meant to happen only once, would be more likely called a project rather
than a process.
The customer is not necessarily a end user, but can also be an internal customer, within the
same company, so between departments.
↓
Now in the middle the
transformations activities, are
now performed by the
operations department.
Here the production processes
in fact, transform raw materials
and components into a finished
good.
Note how the physical supply;
raw materials and components
from the suppliers to the
production process, is
performed by inbound
logistics, while we
call the physical distribution or the finished good from the production process to the
customer is performed by the outbound logistics.
↓
Downstream:
Describe all the flow of products that goes from the suppliers to the customers.
↓
Reverse Logistics:
The products that goes from the customers to the suppliers.
↓
Inbound Logistics:
Raw materials from the suppliers to the production process.
SCM A-Cluster Summary 3
, ↓
Outbound Logistics:
Physical distribution or the finished good from the production process to the customer.
—
Logistics Performance
↓
Effectiveness:
The extent to which an objective has been achieved
↓
Efficiency:
The degree to which resources have been used economically
↓
“Effectiveness is doing the right things; Efficiency is doing things right” - Peter Drucker
Corner Shop 1: Efficient
Corner Shop 2: Effectiveness
—
Logistics and Marketing are Interrelated
Marketing places emphasis on customer satisfaction
↓
Logistics facilitates:
• Place: Providing the product at the right time, in the right quantity in an undamaged
condition.
• Price: In a cost-efficient manner
• Product: Determining inventory levels, order quantities, re-order points, production planning etc
• Promotion: Availability (avoiding stock-outs)
↓
Achieving customer satisfaction requires close coordination between logistics and marketing!
SCM A-Cluster Summary 4
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