management logistics & supply chain isd252 bba year2 · logistics & supply chain management...
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Kwame Nkrumah University ofScience & Technology, Kumasi, Ghana
LOGISTICS & SUPPLY CHAINMANAGEMENTISD252 BBA YEAR2Matilda Kokui Owusu-BioSupply Chain & Information Systems DepartmentSchool of BusinessCoHSSmkobio.ksb@knust.edu.gh
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ISD252INTRODUCTION TO LOGISTICSAND SUPPLY CHAINMANAGEMENT
UNIT 1
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UNIT OVERVIEW
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After reading this unit you should beable to:Differentiate between:
logistics managementsupply chain andsupply chain management.
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UNIT OVERVIEW
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List, explain and discuss thelinkages among the;
logistics functionsLogistics Activities
Understand the history ofLogistics
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Introduction•
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In all facets of our lives, goods and servicesare transported from the place they areproduced to the place they are consumed.In the case where there are many exchangestaken place between producers andconsumers , the firms which are involved inbringing the products or services to themarket are aligned in a network called
supply chain .
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Why do we have to move materials?Let us try to answer this question by analysing a
computer manufacturer.The research and development department(R&D) of the company conceptualises and testsa prototype of lets say a laptopThey launch the new (version) laptop.The company builds some parts itself,subcontracts some parts to its affiliates or buyssome parts from other companies.It then assembles the laptop, tests it beforesending it to its dealers for onward sales tocustomers
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Imagine how many tangible and intangiblegoods have been moved in this case.All organisations have to move materials foreven the smallest of their processes.Manufacturers have to procure raw materialsfrom suppliers and distribute finishedproducts to the customersThe function that is responsible forcontrolling such movement is termed
‘logistics’
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Definitions of Logistics Management?
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The Council of Supply Chain ManagementProfessionals (CSCMP), one of the leadingprofessional organizations for logisticspersonnel, and formerly known as the Councilof Logistics Management [CLM), defineslogistics management as:
‘that part of Supply Chain Management thatplans, implements, and controls the efficient,effective forward and reverse flow andstorage of goods, services and relatedinformation between the point of origin andthe point of consumption in order to meetcustomers' requirements'
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This definition includes the flow ofmaterials and services in both themanufacturing and service sectors.Logistics is not confined to manufacturingoperations alone. It also includes theservice sector with entities such as theGovernment, Hospitals, Banking,Telecommunications, Educationalinstitutions, Retailers and the Hospitalityindustry.
Definitions cont’d…
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Logistics describes the entire process ofmaterials and products moving into, through andout of firms/organizations.Inbound logistics covers the movement ofmaterial received from suppliers.Materials management describes the movementof materials and components within a firm.Physical distribution (PD) refers to themovement of goods outward from the end of theassembly line to the customer.
Definitions cont’d…
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The Logistics Pipeline
Supplier
TransportOperator Manufacturer 3rd Party
DistributorRetailer
Cus
tom
ers
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The Logistics System•
i.ii.iii.iv.
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Logistics is dependent upon Resources as itsInputs. These resources are;
Natural,Human,Financial andInformation (resources for inputs .)
Suppliers provide raw materials, which logisticsmanage in the form of raw material, in-processinventory and finished goods.
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The Logistics System cont’d…•
•i.ii.iii.
Management actions provide the framework forlogistics activities through the process of
Planning , Implementation and Control .The outputs of the logistics system are;
Competitive advantage,Time and Place utility andEfficient move ment to the customer.
These outputs are made possible by theeffective and efficient performance of thelogistics activities.
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The Logistics Process
Physical DistributionPhysical Supply
(Materials management)
LOGISTICS MANAGEMENT
Sources ofSupply
Plants/Operations Customers
• Transportation• Inventory maintenance• Order processing• Acquisition• Protective packaging• Warehousing• Materials handling• Information maintenance
• Transportation• Inventory maintenance• Order processing• Product scheduling• Protective packaging• Warehousing• Materials handling• Information maintenance
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Component of LogisticsThe component parts of logistics are:
1. Sourcing and Procurement2. Manufacturing/Service package3. Distribution4. Storage and Warehousing5. Information systems and management6. Customer service
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LOGISTICS FUNCTIONS/ACTIVITIES
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Customer serviceLogistics communicationPurchasing/procurementInventory controlTransportationWarehousingOrder processingPackagingDemand ForecastingReverse logistics
The activities of Logistics are:
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Elements of Logistics Cont’d...
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1. Customer ServiceA service a firm provides to those who purchase itsproducts or services. It’s a feature of the amplifiedproduct that adds value for the buyer.
2. Logistics communication/Information SystemInformation is needed for both long-range and day-to-daydecision making.Information provides organisations with insight andvisibility into the supply chain activities taking place fromthe distant supplier to customer locations.This information must effectively flow within theorga nization and between key participants/ stakeholders
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Elements of Logistics Cont’d...
•IT systems in logistics provide support in:
Order processing
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Elements of Logistics Cont’d...
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IT systems in logistics provide support in:Warehousing management systemsFleet management systemsRouting and SchedulingOn-vehicle systemsPayment systemsInventory systems
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Elements of Logistics Cont’d...
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3. Procurement/PurchasingProcurement: It’s the acquisition of goods and/orservices at the best possible total cost ofownership, in the right quantity , right quality , atthe right time , in the right place and from the
right source for the direct benefit or use ofcorporations. (5 R’s)Purchasing: It’s the process of ordering andreceiving goods. It is a subset of theProcurement process. Generally, purchasingrefers to the process involved in ordering goodssuch as request, approval, creation of a purchaseorder record (a Purchase Order(P.O.), etc.
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Elements of Logistics Cont’d...
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4. Inventory ControlInventory/Stock is a quantity or store ofgoods that is held for some intendedpurpose or use.Inventory may be kept "in-house," meaningon the premises or nearby for immediateuse; or it may be held in a distantwarehouse or distribution centre for futureuse.
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5. TransportationTransport or transportation is the movement of people andgoods from one location to another.Modes of transport include;
Air,Rail,Road,Water,Cable,Pipeline andSpace.
The field can be divided into infrastructure, vehicles andoperations.
Elements of Logistics Cont’d...
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6. WarehousingWarehousing is that part of a firm's logisticssystem that stores products (raw materials,parts, goods-in-process, finished goods) atand between point of origin and point ofconsumptionProvides information to management on thestatus, condition and disposition of itemsbeing storedThe term Distribution Centre (DC) issometimes used.
Elements of Logistics Cont’d...
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6. Warehousing
Elements of Logistics Cont’d...
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6. Warehousing
Elements of Logistics Cont’d...
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6. Warehousing
Elements of Logistics Cont’d...
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7. Order ProcessingOrder processing is the term generally used todescribe the process or the work flow associatedwith the picking, packing and delivery of the packeditem(s) to a shipping carrier.
8. PackagingPackaging is the Science, Art, and Technology ofenclosing or protecting products for distribution,storage, sale and use.Packaging can be described as a coordinatedsystem of preparing goods for transport,warehousing, sales and end use.
Elements of Logistics Cont’d...
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8. Packaging cont’d…Packaging contains, protects, preserves,transports, informs, and sells.Packaging Objectives:
Protection (Physical, barrier,)Containment or agglomerationInformation transmissionMarketingSecurity, etc.
Elements of Logistics Cont’d...
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8. Packaging cont’d…(Valentines day Hamper)
Elements of Logistics Cont’d...
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8. Packaging cont’d…(Valentines day Hamper)
Elements of Logistics Cont’d...
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8. Packaging cont’d…
Elements of Logistics Cont’d...
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8. Packaging cont’d…
Elements of Logistics Cont’d...
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8. Packaging cont’d…
Elements of Logistics Cont’d...
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9. Demand ForecastingActivity of estimating the quantity of aproduct or service that consumers willpurchase at specific times.Demand forecasting may be used inmaking pricing decisions, in assessingfuture capacity requirements, or inmaking decisions on whether to enter anew market.
Elements of Logistics Cont’d...
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•10. Reverse logistics
It is the process of planning,implementing, and controlling theefficient, cost effective flow of rawmaterials, in-process inventory, finishedgoods and related information from thepoint of consumption to the point oforigin for the purpose of recapturingvalue or proper disposal.
Elements of Logistics Cont’d...
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11. Materials HandlingHandling and storing materials involvediverse operations such as hoisting tons ofsteel/rice/sugar with a crane; driving a truckloaded with same; carrying bags or materialsmanually; and stacking palletized bricks orother materials such as drums, barrels,lumber, etcImproper handling and storing of materialsoften result in costly spoilage and injuries.
Elements of Logistics Cont’d...
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11. Materials Handling
Elements of Logistics Cont’d...
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12. Logistics Strategic PlanningThe challenge for logistics managersnowadays is to constantly balance aneed to perform well while respondingto a constantly changing environment.Logistics managers must proactivelyand strategically plan for the future andtherefore prepare for these changes
Elements of Logistics Cont’d...
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•13. Service Support
Parts and service support, or after-saleservice support, provides repairs,spares and parts to dealers/customersand ensures the collection of defectiveor malfunctioning products fromcustomers, and responding quickly todemands for repairs or assistance.
Elements of Logistics Cont’d...
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FACTORS INFLUENCING LOGISTICS PLANNING
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GlobalizationTechnologyUncertaintiesIndustry Growth
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The probable origin of the term is the Greeklogistikos , meaning ‘skilled in calculating’.
The term, logistics, was initially developed inthe context of military activities in the late18th and early 19th centuriesIt was launched from the military logistics ofWorld War II which was concerned withgetting soldiers and weapons to thebattlefront on time for a fight with victory astheir goal.
DEVELOPMENT OF LOGISTICS OVER TIME
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And now, a number of researches haveadopted the military logistics applications tobusiness activities.Business logistics was not an academicsubject until the 1960s.A key element of logistics, the trade-offbetween transport and inventory costs, wasformally recognized in economics at leastas early as the mid-1880s. (BTRE, 2001).
DEVELOPMENT OF LOGISTICS CONT’D…
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Development of logistics started 40-50 yearsago with the integration of local level transportand warehousing operations into PhysicalDistribution systemsThis integration has transformed the waybusinesses move, store and handle theirproducts.Businesses now use different types oftransport to link suppliers & distributorsacross long distancesPDM - Total Logistics - SCM
DEVELOPMENT OF LOGISTICS CONT’D…
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i. Early 1960s: Physical DistributionManagement (PDM)Efforts were started in the USA to transformPDM. Separate Distribution unit created tocoordinate the management of transport,warehousing, inventory management,materials handling and order processing.Outbound distribution integration helped firmsto develop explicit customer service strategiesand led to meeting customer needs atminimum cost
EVOLUTION OF LOGISTICS
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ii. Late 1970s: Logistics and “TotalLogistics”The era handled the overallresponsibility for the movement, storage,and handling of both inbound &outbound products. Played a role inproduct development, recycling andafter sales service.
EVOLUTION OF LOGISTICS
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iii. Early 1990s: Logistics & Business ProcessRe-engineering (BPR)Principles of BPR was adapted to logisticsemphasizing 4 factors common to LogisticsReEng–Systems Integration, Benchmarking,Analysis of Logistics activities and ContinuousImprovementiv. Last 20 YearsSupply Chain Management (SCM) and itsoptimization. The main motivation of this SCMera has been the desire to minimize inventory
EVOLUTION OF LOGISTICS
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CASE STUDY ANALYSIS1.
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Explain one of the vectors thathas influenced human societythrough logistics especially in theway business is done and policy.Indicate one technology that theresearchers believe hasdrastically changed logistics andgive an example.
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Review Questions1.
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Analyze the logistics system of ; A nursery schoolA mobile-money operatorA Church in Ghana
Is Logistics relevant to KSB’soperations?
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End of LectureThank You
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