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  7. Logistics And Supply Chain Management

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Summary Logistics & supply chain management IBM1

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Full summary of the course Logistics & supply chain management given by Simon van Beveren in the first year of IBM. Normaly a 2nd semester course, this summary is of the same course given in the 1st semester. The content is the same and contains everything needed for the exam. Summary is based on t...

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  • 22 janvier 2023
  • 63
  • 2022/2023
  • Resume

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Summary: Logistics and Supply Chain
Management
Table of contents
Chapter 1: What is Logistics & SCM? ................................................................................................................................ 7
1. What is logistics..................................................................................................................................................... 7
1.1 logistics involves getting: .................................................................................................................................... 7
1.2 logistics is: ........................................................................................................................................................... 7
1.3 What is logistics Management? .......................................................................................................................... 7
2. What is SCM? ........................................................................................................................................................ 7
2.1 what is a supply chain? ....................................................................................................................................... 7
2.2 Supply chain management .................................................................................................................................. 7
2.3 The integrated supply chain: End-to-End............................................................................................................ 8
2.4 Supply Chain Views ............................................................................................................................................. 8
3. Distinguishing Logistics and SCM .......................................................................................................................... 9
3.1 SCM is a Wider Concept than Logistics .............................................................................................................. 9
3.2 SCOR-model ........................................................................................................................................................ 9
3.3 Link to other disciplines ...................................................................................................................................... 9
4. The 6 key developments in L&SCM = SCM Revolution ......................................................................................... 9
4.1 Shifting to transporting higher value goods ....................................................................................................... 9
4.2 Falling product / material prices ....................................................................................................................... 10
4.3 Deregulation of transport ................................................................................................................................. 10
4.4 Productivity improvements............................................................................................................................... 10
4.5 Emphasis on inventory reduction ..................................................................................................................... 10
4.6 Changes in company structure ......................................................................................................................... 10
5. Application to manufacturing and services ........................................................................................................ 10
5.1 L&SCM usage .................................................................................................................................................... 10
Chapter 2: International Trade & Globalization.............................................................................................................. 11
1. Growth in international trade ............................................................................................................................. 11
1.1 History of growth .............................................................................................................................................. 11
1.2 Limiting international trade .............................................................................................................................. 11
1.3 Impact of Covid-19 ............................................................................................................................................ 11
1.4 Important conclusions ...................................................................................................................................... 11
2. Containers: the humble hero .............................................................................................................................. 11
2.1 The true driver of globalization......................................................................................................................... 11
3. Measuring logistics performance........................................................................................................................ 12
3.1 Logistics performance index (LPI) ..................................................................................................................... 12
1

, 4. Globalization ....................................................................................................................................................... 12
4.1 Definitions ......................................................................................................................................................... 12
4.2 Production site selection factors ...................................................................................................................... 12
5. Directional Imbalances........................................................................................................................................ 12
5.1 What? ................................................................................................................................................................ 12
Chapter 3: From strategy to execution ........................................................................................................................... 13
1. Corporate Strategy (Business strategy / Value proposition) .............................................................................. 13
1.1 What is the goal of the company? .................................................................................................................... 13
1.2 Types of strategy ......................................................................................................................................... 13
1.3 Value proposition ........................................................................................................................................ 14
1.4 Is every customer the same? ...................................................................................................................... 14
2. Functional strategy ............................................................................................................................................. 14
2.1 Divisional? Functional? ..................................................................................................................................... 14
2.2Key Performance Indicators (KPIs) ..................................................................................................................... 14
2.3 Different approaches ........................................................................................................................................ 15
3. Supply chain strategy .......................................................................................................................................... 15
3.1 What? ................................................................................................................................................................ 15
3.2 Responsibilities of the SC manager ................................................................................................................... 15
3.3 What can SC actually influence? ....................................................................................................................... 16
3.4 Achieve the strategic fit .................................................................................................................................... 16
4. The planning hierarchy ........................................................................................................................................... 17
4.1 The planning hierarchy ..................................................................................................................................... 17
4.2 Corporate strategy ............................................................................................................................................ 17
4.3 Business plan ..................................................................................................................................................... 17
4.4 Sales & operations planning (S&OP) ................................................................................................................. 17
4.5 Master scheduling ............................................................................................................................................. 18
4.6 Material requirement planning (MRP).............................................................................................................. 18
Chapter 4: Inventory Management ................................................................................................................................ 19
1. The importance of inventory management ...................................................................................................... 19
1.1 What is inventory? ............................................................................................................................................ 19
1.2 Inventory – why?............................................................................................................................................... 20
1.3 Inventory – Balancing costs .............................................................................................................................. 20
2. The economic order quantity (EOQ) model ............................................................................................................ 21
2.1 Inventory build-up and depletion ..................................................................................................................... 21
2.2 Balancing ordering and holding / carrying costs ............................................................................................... 21
2.3 The sawtooth diagram ...................................................................................................................................... 21
2.4 EOQ Model graph.............................................................................................................................................. 22
2.5 Calculating the order quantity .......................................................................................................................... 22

2

, 3. Safety stock........................................................................................................................................................ 22
4. Matching inventory policy with inventory type ...................................................................................................... 22
4.1 ABC analysis – Pareto principle ......................................................................................................................... 22
4.2 Pareto = 80/20 rule ........................................................................................................................................... 23
4.3 Relevance of ABC analysis ................................................................................................................................. 23
5. Inventory reduction principles ................................................................................................................................ 23
5.1 Pool inventor & Inventory centralization.......................................................................................................... 23
5.2 Reduce variation & lead times .......................................................................................................................... 23
5.3 Delayed product differentiation ....................................................................................................................... 24
5.4 Part commonality .............................................................................................................................................. 24
5.5 Transit inventory ............................................................................................................................................... 24
Chapter 5: Procurement ................................................................................................................................................. 25
1. Procurement vs Purchasing .................................................................................................................................... 25
1.1 Difference between procurement & purchasing .............................................................................................. 25
2. Classification of items ............................................................................................................................................. 25
2.1 Goods vs. Services ............................................................................................................................................. 25
2.2 Direct vs. Indirect purchase / Spend ................................................................................................................. 26
2.3 Procurement Categories ................................................................................................................................... 26
2.4 Category managers ........................................................................................................................................... 26
3. Three levels of procurement ................................................................................................................................... 26
3.1 Strategic procurement ...................................................................................................................................... 26
3.2 Tactical procurement ........................................................................................................................................ 27
3.3 Operational Procurement ................................................................................................................................. 27
3.4 Procurement role: Isolated? ............................................................................................................................. 27
4. Portfolio analysis (EXAM!) ...................................................................................................................................... 28
4.1 Pareto principle ................................................................................................................................................. 28
4.2 Peter Kraljic Portfolio Matrix ............................................................................................................................ 28
5. Procurement Process......................................................................................................................................... 29
5.1 Specifying .......................................................................................................................................................... 29
5.2 Selecting ............................................................................................................................................................ 29
5.3 Contracting ........................................................................................................................................................ 30
5.4 Ordering ............................................................................................................................................................ 31
5.5 Deliveries / follow up ........................................................................................................................................ 31
5.6 Performance follow up ..................................................................................................................................... 32
6. Ethical sourcing & Sustainability ............................................................................................................................. 32
6.1 What? ................................................................................................................................................................ 32
6.2 Impact ............................................................................................................................................................... 33
7. E-Procurement ........................................................................................................................................................ 33

3

, 7.1 Definition........................................................................................................................................................... 33
7.2 Why? ................................................................................................................................................................. 33
Chapter 6: Manufacturing............................................................................................................................................... 34
1. The evolution of manufacturing ............................................................................................................................. 34
1.1 What is manufacturing? .................................................................................................................................... 34
1.2 The evolution of manufacturing ....................................................................................................................... 34
2. Lean production ...................................................................................................................................................... 34
2.1 What is lean production .................................................................................................................................... 34
2.2 Key areas of waste = TIMWOOD(s) – 7+1 ......................................................................................................... 35
3. Agile Supply chains and mass customisation .......................................................................................................... 35
3.1 Current trend .................................................................................................................................................... 35
3.2 What is Agile Sc and mass Customization ......................................................................................................... 35
3.3 Principle of postponement ............................................................................................................................... 36
4. Customer Order Decoupling Point (CODP) ............................................................................................................. 36
4.1 What is a CODP? ............................................................................................................................................... 36
4.2 The 5 COPD’s ..................................................................................................................................................... 36
4.3 The decoupling point ........................................................................................................................................ 37
4.4 Importance of CODP ......................................................................................................................................... 37
4.5 MTS, MTO, ATO, ETO? ...................................................................................................................................... 37
4.6 Volume vs. Variety ............................................................................................................................................ 37
4.7 Link to Agile or Lean? ........................................................................................................................................ 38
Chapter 7: Distribution ................................................................................................................................................... 38
1. Distribution ......................................................................................................................................................... 38
1.1 Distribution Channels ........................................................................................................................................ 38
2. Warehousing ....................................................................................................................................................... 39
2.1 Warehousing in global supply chains ................................................................................................................ 39
2.2 Value-adding Activities...................................................................................................................................... 40
2.3 European Logistics Hubs ................................................................................................................................... 41
2.4 Warehouse lay-out and design ......................................................................................................................... 42
2.5 Automation in warehousing - technologies ...................................................................................................... 43
2.6 Cross-docking .................................................................................................................................................... 43
2.7 Warehouse management systems.................................................................................................................... 44
2.8 Materials handling and storage ........................................................................................................................ 45
2.9 Additional technology aspects .......................................................................................................................... 47
3. Transportation .................................................................................................................................................... 49
3.1. Characteristics of the different transport modes ............................................................................................ 49
3.2 Different Transport modes ............................................................................................................................... 50
3.3 Load devices used in international transport ................................................................................................... 52

4

, 3.4 Efficiency of transport services ......................................................................................................................... 52
3.5 International transport networks ..................................................................................................................... 52
Chapter 8: Reverse Logistics & Sustainability ................................................................................................................. 53
1. Definition of reverse logistics ............................................................................................................................ 53
1.1 Concept of reuse and recovering value ............................................................................................................ 53
1.2 Definition........................................................................................................................................................... 53
2. Motivations for reverse logistics ............................................................................................................................. 53
2.1 Four motivations ............................................................................................................................................... 53
3. Recovery options in reverse logistics ...................................................................................................................... 54
3.1 Five Recovery methods ..................................................................................................................................... 54
3.2 Closed or open system ...................................................................................................................................... 54
4. Impact on the supply chain ..................................................................................................................................... 55
4.1 Complexity ........................................................................................................................................................ 55
4.2 Impact on KPI’s .................................................................................................................................................. 55
5. Sustainability in the supply chain ...................................................................................................................... 56
5.1 Sustainability and sustainable logistics ............................................................................................................. 56
5.2 Circular Economy .............................................................................................................................................. 56
6. The green revolution & Supply chain redesign ....................................................................................................... 57
6.1 Drivers behind the emphasis on green issues................................................................................................... 57
6.2 Supply Chain Redesign ...................................................................................................................................... 57
7. Technological developments .................................................................................................................................. 57
7.1 Scale .................................................................................................................................................................. 57
7.2 Transport & Fuel use ......................................................................................................................................... 58
Chapter 9: Supply Chain Relationships & Collaboration ................................................................................................. 58
1. Globalization of supply chain .................................................................................................................................. 58
1.1 Globalization and its effects .............................................................................................................................. 58
2. Outsourcing ....................................................................................................................................................... 59
2.1 Definition........................................................................................................................................................... 59
2.2 Different tiers of outsourcing............................................................................................................................ 59
2.3 Reasons for outsourcing ................................................................................................................................... 60
3. Logistics of outsourcing........................................................................................................................................... 60
3.1 Developments leading to logistics outsourcing ................................................................................................ 60
3.2 Different services identified .............................................................................................................................. 60
4. Offshoring ............................................................................................................................................................... 61
4.1 Definition........................................................................................................................................................... 61
4.2 Why offshore? ................................................................................................................................................... 61
4.3 Onshoring & Nearshoring ................................................................................................................................. 61
5. Supply chain integration & collaboration ............................................................................................................... 62

5

, 5.1 Visualisation ...................................................................................................................................................... 62
5.2 Internal integration ........................................................................................................................................... 62
5.3 External integration .......................................................................................................................................... 62
5.4 Horizontal & vertical collaboration ................................................................................................................... 63
6. Bull Whip ................................................................................................................................................................. 63
6.1 Definition........................................................................................................................................................... 63




6

,Chapter 1: What is Logistics & SCM?
1. What is logistics
1.1 logistics involves getting:
• the right product,
• in the right way,
• in the right quantity and right quality,
• in the right place at the right time,
• for the right customer at the right cost

1.2 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.

1.3 What is logistics Management?
• Logistics management is primarily concerned with optimizing flows within the organization
• The mission of logistics management is to serve the customer in the most cost-effective way
• More than “trucks and sheds” / “wheels and walls” alone

2. What is SCM?
2.1 what is a supply chain?
• A supply chain is a system of organizations, people, activities, information and resources involved in
moving a product or service from supplier to customer. Supply chain activities transform natural resources,
raw materials and components into a finished product that is delivered to the end customer.
• A supply chain is a network of connected and interdependent organizations mutually and co-operatively
working together to control, manage and improve the flow of materials, resources (money + people +
equipment) and information from suppliers to end users.

2.2 Supply chain management
• SCM is the management of a network of relationships within a firm and between interdependent
organizations and business units consisting of material suppliers, purchasing, production facilities, logistics,
marketing, and related systems that facilitate the forward and reverse flow of materials, services, finances
and information from the original producer to final customer with the benefits of adding value, maximizing
profitability through efficiencies and achieving customer satisfaction.
➔ END-TO-END PERSPECTIVE




7

, 2.3 The integrated supply chain: End-to-End

Downstream

Materials flow




suppliers procurement operations distribution customers




Requirements information flow

Upstream




2.4 Supply Chain Views
• Push:




• Pull




8

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