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Topic 1.1: Integrated Supply Chain

Learning Outcome: ILO1 of Module Descriptor

References see Lecture Program: Bowersox, Coyle, Grant, Lawton, Internet resources

1.1.1

Logistics Concept

Many different organizations develop concept of logistics and supply chain, university of Tennesee,

Michigan State University, Penn State University, National Council of Physical Distribution

Management.

Logistics is the process by timing and positioning inventory. Tasks include: (1) Order management

(2) inventory (3) transportation (4) warehousing (5) material movement (6) packaging.

I.T. is the enabler of supply chain management

Supply chain management consists of firms collaborating to leverage strategic positioning with

trading partners in order to increase competitive advantage, to increase operational efficiency.

Supply chain operations management involves different departments of individual firms plus the

link with trading partners and customers.

Why do firms cooperate? ____________ Each firm has ….

Give a better concept of supply chain starting in the 1960s. – lowest system cost among different

system system of transporation, inventory handling, warehousing management, prduct

packageing material handling y different cost centers.

Choice of mode of transport include rail,

Globalization concept – making a firm globally competitive helping to gain more market share.

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Functional Integration of Logistics

Figure 1.1.1

1.1.2

Logistics and the Firm

1.1.2.1 Happy customers means More profit for the company

Figure 1.1.2.1

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The 4Ps for the 2C (customer satisfaction and company profit)

product

Price

Promotion

Distribution, transport, warehouse – Logistics)

1.1.2.2 Integrated logistics concept as total system cost for customer satisfaction

Figure 1.1.2.2

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The logistics management process considers the customer as the value, the inner box

procurement, operations distribution as the focal company; supplier as a trading partner in the

supply chain.

1.1.3

Integrated Logistics Management

Figure 1.1.3

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Integrated Logistics Management goes beyond outbound logistics of “customer service delivery.

Outbound logistics (downstream logistics) has transportation, order processing fulfillment,

distribution planning, finished goods

Inbound logistics (upstream logistics from supplier) has purchasing, manufacturing inventory,

production planning, requirements planning, demand forecasting

1.1.4

Value Chain

Figure 1.1.4

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The value chain management concept considers inbound logistics, company operations, outbound

logistics, marketing and sales, customer service as primary activities;

HR, technology, purchasing, company infrastructure as support activities.

1.1.5

Integrated Supply Chain

Figure 1.1.5

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1.1.6

Airline Examples

1.1.5.1 Airline example 1 - Supplier (Service Provider) for Airways: Inventory Planning Case

http://www.encyclopedia.com/doc/1G1-65287939.html

ROCHESTER, N.Y., Sept. 18 /PRNewswire/ -- Xelus, Inc., the leading provider of planning,

optimization and Web-enabled solutions for the Service Supply Chain, announced today that

British Airways has selected the XelusPlan inventory planning solution.

The XelusPlan solution will be used to optimize inventory of British Airways Engineering, which is

responsible for servicing, maintaining and overhauling British Airways' aircraft. The

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implementation phase will start immediately at both Heathrow and Gatwick Airports. The

software will be used by 120 planners ...

1.1.5.2 Airline Example 2 - Inventory and customer relationship management

Figure 1.1.5.2

Sample Case Question:

British Airways Catering Management would like to:

1. Fine tune stock holding to optimum level

2. Track stock by destination, flight, and best to individual passengers (they have the Executive

Club, like Cathay Pacific’s Frequent Flyer program);

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3. They wish that British Airways Executive Club “Gold Card” members be greeted on board with

glass of wine of their favorite taste or a copy of particular magazine (like “Next Magazine”);

Question: Can we provide a system that enable British Airways to calculate the cost of providing

these customer relationship management (CRM) function?

1.1.6

Deregulation and Global Supply Chain

Deregulation changes the business economy in transportation, communications, change for

domestic organizations; change for transnational corporations

During 1990 SCM function is part of CEO, CFO, COO, CIO, why?

Globalization - Today’s environment is called global supply chain management.

What are the implications? The distance factor, UK going to Brazil, company’s growth and

expansion;

Transportation: Air Cargo, Container Shipping, Third Party logistics, 4th Party Logistics.

What makes the change? The global political economy; the dynamics of the global market place;

the empowered customer; the large retailer.

Wal-Mart, FedEx, DHL, EXO Start .

1.1.7

Some issues in Logistics: quick response, efficient consumer response, JIT management

British Airways pulling the line items (pull technology?)

JIT Toyota – parts to show up when needed

Others

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Topic of outsourcing

Why 3PL: an expert in efficiently providing the service

4PL: SCM and assembly of finished goods on behalf of customers.

Components of logistics management

Figure 1.1.7