1.
Business Logistics/Supply
Chain—A Vital Subject
The supply chain is simply another way of
saying “the whole process of business.”

2.
Supply Chain Management Defined by Stock
& Boyer in 2009
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.

3.
Warehousing
Warehousing
Transportation
Transportation
Vendors/plants/ports
Transportation
Factory
Transportation Customers
Information
flows
The Immediate Supply Chain for an Individual Firm

4.
Supply Chain: Manufacturing Example

5.
Supply Chain: Service Example

6.
Supply Chain management
• Cross function approach
• Integrated approach
• Overall objective is more important
• Conflict resolution
• Planning uncertainty i.e. contingency plans
• Decision making at corporate level
• Eliminate redundant activities
• Ultimate objective is customer
astonishment

7.
Creating Value
• Companies seek to develop a distinctive
advantage and differentiate themselves in the
mind of consumer.
• Customers seek value in terms of:
– Quality
– Cost
– Flexibility
– Delivery
– Innovation

8.
The Value Chain of typical manufacturing firm
INDIRECTLY
create the
value as
perceived by
the customer
DIRECTLY
create the
value as
perceived
by the
customer

9.
Internal Value Chain: Local Focus
R & D
Operations
Executive
Management
Logistics
Marketing
Human
Resource
Management
Accounting
Finance
Supply
Management
Information
Technology

10.
Internal Value Chain: Company Focus
R & D
Operations
Executive
Management
Logistics
Marketing
Human
Resource
Management
Accounting
Finance
Supply
Management
Information
Technology
Upstream
Suppliers
Downstream
Customers

11.
Internal Value Chain: Company Focus
R & D
Operations
Executive
Management
Logistics
Marketing
Human
Resource
Management
Accounting
Finance
Supply
Management
Information
Technology
Upstream
Suppliers
Downstream
Customers

12.
SCM: Linked Value Chains
R & D
Executive
Management
Logistics
Human
Resource
Management
Accounting
Finance
Supply
Management
Information
Technology
R & D
Executive
Management
Logistics
Human
Resource
Management
FinaMnacerketing
Accounting
Finance
Supply
Management
Information
Technology
R & D
Operations
Executive
Management
InformationOperations
Logistics
Marketing
Human
Resource
Management
Accounting
Finance Marketing
Supply
Management
Technology
R & D
Operations
Executive
Management
Logistics
Marketing
Human
Resource
Management
Accounting
Supply
Management
Information
TechOnopleorgaytions
R & D
Operations
Executive
Management
Logistics
Marketing
Human
Resource
Accounting
Finance
Supply
Management
Information
Technology
Focal
FirmManagement
Supplier
Supplier’s
Supplier
Customer Customer’s
Customer

13.
Supply Chain Integration
Common
Theoretical Ideal

14.
Focus
Company
Suppliers
Supplier’s
suppliers
Customers
Customers/
End users
Acquire Convert Distribute
The Supply Chain is Multi-Enterprise
Product and information flow
Scope in
reality
CR (2004) Prentice Hall, Inc.

15.
Generalized Supply Chain Model
SUPPLIER
NETWORK
INTEGRA
TED
ENTERPRISE DISTRIBUTIVE
NETWORK
Information, Product, Service, Financial and Knowledge Flows
M
A
T
E
R
I
A
L
S
Capacity, Information, Core Competencies, Capital and Human Resources
Supply Chain Logistics Management, First Edition. Bowersox, Closs, and Cooper.
Copyright© 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Relationship Management
Procurement
Manufacturing
Distribution
E
N
D
C
O
N
S
U
M
E
R
S

16.
Conflicts within the supply chains
 High inventories – higher customer service levels
 [ but supply chains operate inefficiently]
 Low inventories – Efficient supply chain operations
 [ but customer service levels are at stake]
Supplier
objective
Manufacturer
objective
Retailer
objective
Customer
objective
Large stable
demand for less
variety of
materials
Desire low
product variety /
high production
volumes
Reduce
inventory and
transportation
costs
Low price &
high product
quality and
variety
Flexible delivery
schedules
Flexible delivery
schedules
Rapid
replenishment
JIT receiving
of products,
short lead
times
Supply chain management best practices by Blenchard

17.
Inventory Strategy
• Forecasting Transport Strategy
• Inventory decisions • Transport fundamentals
• Purchasing and supply
Customer
• Transport decisions
C
O
N
T
R
O
L
L
I
N
G
G
scheduling decisions
service goals
NNING
NIZIN
• Storage fundamentals
• Storage decisions • The product
• Logistics service
A
• Ord. proc. & info. sys.
A
PL ORG
Location Strategy
• Location decisions
• The network planning process
PLANNING
ORGANIZING
CONTROLLING
Transport Strategy
• Transport fundamentals
• Transport decisions
Customer
service goals
• The product
• Logistics service
• Ord. proc. & info. sys.
Inventory Strategy
• Forecasting
• Inventory decisions
• Purchasing and supply
scheduling decisions
• Storage fundamentals
• Storage decisions
Location Strategy
• Location decisions
• The network planning process
Study Framework
The focus is
here

18.
Corporate Strategy
 Strategy formulation begins with defining a corporate
strategy. This involves:
a.Assessing needs, strengths, and weaknesses of the 4
major components:
- customers
- suppliers
- competitors
- the company itself
b."Visioning" where counter -intuitive, unheard of, and
unconventional strategies are considered.
 Corporate strategies are converted to more specific
strategies for the various functional areas of the firm such as
logistics.

19.
The Bullwhip Effect
• Variation in demand is exaggerated as
information moves upstream away from the
point of use.
• Variation in demand is exaggerated due to
infrequent demand and/or inventory level
information exchange and order batching.

20.
The Dynamics of the Supply Chain
Order
Size
Time
Customer
Demand
Retailer Orders
Distributor Orders
Production Plan

21.
The Dynamics of the Supply Chain
Order
Size
Time
Customer
Demand
Production Plan

22.
Demand Collaboration
• Bullwhip effect costs can be as high as 12 to
25%
• Bullwhip can be effectively mitigated by:
– Sharing point of sale data
– Collaborative forecasting
– Collaborative future product promotion planning