Logistics & SCM

Logistics Defined

Logistics means having the right thing, at the

right place, at the right time

The procurement, maintenance, distribution and

replacement of personnel and materials Websters
Dictionary

The science of planning, organizing and managing

activities that provide goods or services Logistics
World, 1997
 Logistics and Marketing

Interface on:
Product design and pricing
Customer service policies
Sales forecasts and order processing
Inventory policies and location of warehouses
Channels of distribution and dispatch planning
Transportation to reach products to customers

Production wants larger production runs to

minimize time spent on set up changes on the
machines. Marketing wants smaller runs of a
variety of products.
SDM Ch 15 3
 Components of LOG
Management
Logistics Activities
Input Output

Customer service
Demand forecasting Marketing
Natural Distribution Communications
Orientation
Resources Inventory control
Materials handling (competitive
(land, facilities
Order processing Advantage)
Equipment) Parts and service support Time and
HR Plants and warehouse selection
Place utility
Finance Procurement
Packaging Efficient move
Information Return goods handling to customer
Salvage and scrap disposal
Traffic and transportation
Warehouse and storage

SDM Ch 15 4
 Logistics and SCM
Logistics is more concerned with activities
within the company procurement,
production scheduling, dispatch planning,
inventory, warehousing and transportation.

Supply chain management extends the

process of planning procurement, production
and dispatches beyond the company
boundaries to its suppliers and customers.
SDM Ch 15 5
 Supply Chain Integration
Customer Analysis
Order Fulfillment
Purchasing/Supplier
Partnering

Integrated Inventory Management and

control
Storage & Supply Chain
Transportation Management

Manufacturing/ Demand & Lead

Re-manufacturing/ Time Management
Assembly

Materials
Inventory managemen
SDM Ch 15 Management 6
 Inventory

Inventory serves as a buffer between:

Supply and demand
Customer demand and finished goods
Material requirements for an operation and
the output from the previous operation
Parts and materials to begin an operation and
the suppliers of these materials
 Types of Classification
ABC category most common for all
HML - high, medium, low - similar
FSND fast moving, slow moving, non-moving, dead
spare parts / FG
SDE scarce, difficult, easy to obtain procurement
/ Spares
GOLF govt, ordinary, local, foreign source
procurement / Spares
VED vital, essential, desirable spare parts / FG
SOS seasonal, off-seasonal - commodity

SDM Ch 15 8
 Inventory Related Costs

Unit costs basic value of the item carried

Ordering costs generating and sending a material
release, transport, any other acquisition costs
Carrying costs capital, storage, obsolescence
Stock-out costs
Quality costs non-conforming goods
Other costs duties, tooling, exchange rate
differences etc

SDM Ch 15 9
 Transportation Principles

Continuous flow
Optimise unit of cargo - stackability
Maximum vehicle unit capacity utilization
Adaptation of vehicle unit to volume and nature of
traffic
Standardisation
Compatibility of unit load equipment
Minimum of dead weight to total weight
Maximum utilization of capital, equipment and
personnel

SDM Ch 15 10
Process.
Thank You!