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The supply chain is simply another way of saying the whole process of business.
Chapter 1
CR (2004) Prentice Hall, Inc.
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Introduction
SCM and logistics activities provide the bridge between production and market locations that are separated by time and distance.
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Transportation
Warehousing
Transportation
Customers
Transportation
Vendors/plants/ports
Warehousing
CR (2004) Prentice Hall, Inc.
Transportation
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The supply chain encompasses all activities associated with the flow and transformation of goods from the raw material stage (extraction), through to the end user, as well as the associated information flows. Materials and information flow both up and down the supply chain. (Handfield and Nichols,1999)
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Supply Chain Management (SCM) is the integration of these activities, through improved supply chain relationships, to achieve a sustainable competitive advantage. (Handfield and Nichols)
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Within the supply chain Mentzer et al.(2001) propose the broad and rather general definition: Supply chain management is defined as the systematic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of
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Improving the long term performance of the individual companies and the supply chain as a whole. Russell Morey, 1997 defined SCM as the process of planning organizing and controlling the flow of materials and services from suppliers to end users/ customers. This integrated approach incorporates suppliers, supply management, integrated logistics and operations.
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Logistics is that part of the supply chain process that plans, implements and controls the efficient, effective flow and storage of goods, services and related information from the point of origin to the point of consumption in order to meet customers requirements. (Council of Logistics Management)
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Integrated Logistics is the process of anticipating customer needs and wants; acquiring the capital, materials, people, technologies and information necessary to meet those needs and wants; optimizing the goods or service producing network to fulfill customers requests; and utilizing the network to fulfill customer requests in a timely way. (Arthur D. Little and Pennsylvania State University)
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$/cwt. $26.52
18.06 4.58
Logistics cost are about 10% of sales w/o 22.25costs purchasing
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2.79
1.72 7.65%
$67.71
Significance of Logistics
Costs are high
About 10.5% of GDP domestically About 12% of GDP internationally A range of 4 to 30% of sales for individual firms, avg. about 10% A high as 70-80% of sales if purchasing and production are included
Desire for quick response Desire for mass customization Generate revenue Improve profit
Local vs. long distance supply Law of comparative economic advantage applies Time and place utilities
Logistics is a key to trade and an increased standard of living Logistics adds value
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Marketing
Logistics Tariffs Overhead
Increase
Materials
Materials
Labor
CR (2004) Prentice Hall, Inc.
Reduction
Labor
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Physical supply (Materials management) Sources of supply Plants/ operations Transportation Inventory maintenance Order processing Acquisition Protective packaging Warehousing Materials handling Information maintenance
Physical distribution
Customers Transportation Inventory maintenance Order processing Product scheduling Protective packaging Warehousing Materials handling Information maintenance
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Key Activities/Processes
Primary - Setting customer service goals - Transportation - Inventory management - Location Secondary, or supporting - Warehousing - Materials handling - Acquisition (purchasing) - Protective packaging - Product scheduling - Order processing
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Acquire
Convert
Product and information flow
Distribute
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Reality of SC Scope
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The Multi-Dimensions of SC
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A workable financial objective for scm/logistics can be expressed in the ratio known as ROLA (Return on Logistics Assets). ROLA is defined as: ROLA = (Contribution to revenue Logistics operating costs) / Logistics Assets
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PRODUCTION/ OPERATIONS Sample activities: Quality control Detailed production scheduling Equipment maint . Capacity planning Work measurement & standards
Productionlogistics interface
Marketinglogistics interface
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Promotion
Logistics
Transport costs
Warehousing costs
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