Download Logistics management

Logistics & Supply
Chain Management
Given by
Youli Wang
PhD
[email protected]
Who am I
• Yang Cheng (程杨)
• Education
o PhD in Operations Management from Center for Industrial
Production, Aalborg University, Denmark
o Master in Management Science and Engineering from Beihang
University, China
o Bachelor in Industrial Engineering from Beihang university, China
• Research
o Assistant Professor in Aalborg University
o Visiting scholar in Cambridge University and Zhejiang University
o Manufacturing strategy, servitization of manufacturing,
manufacturing network, and knowledge transfer
o More than 30 publications
• Contact
o QQ: 38921063
o 新浪微博： chengyang的围脖
Course purpose
• Logistics & supply chain management
o Understandings on logistics & supply chain management
o How to create and manage logistics and supply chain
o What is the future of logistics & supply chain
• Beyond the topic
o Logic thinking: What you are doing, why you are doing it,
how you do it, implications of what you are seeking to do
o Useful no matter where you will be in the future
Course structure
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Logistics, the supply chain and competitive strategy
Logistics and customer value
Measuring logistics costs and performance
Matching supply and demand
Creating the responsive supply chain
Strategic lead-time management
The synchronous supply chain
Complexity and the supply chain
Managing the global pipeline
Managing risk in the supply chain
The era of network competition
Overcoming the barriers to supply chain integration
Creating a sustainable supply chain
The supply chain of the future
Understanding
on LSCM
How to create
and manage
LSC
The future of
LSC
Textbook
• Martin, C. (2011). Logistics &
Supply Chain Management
(Fourth Edition). Pearson
Education, ISBN: 978-0-27373112-2.
• Upload to a public email:
[email protected]
(password: supplychain2013)
• Other materials
Course requirement
• No specific requirement: you want to come, you
come; roll call randomly;
• Once you are in the classroom, I do not care what
you are doing, but show your respect to your
classmates and me; do not disturb others
• Not just lectures, but an interactive way; discussions,
quiz randomly
• Questions: ask any time, do not be shamed
• Challenging me
• Not about memorizing, but about understanding
Assessment
• Team work
• Each team chooses one company
• Collect logistics/supply chain related information of
the selected company
o From internet
o From your interviews or observations
• Use what is learnt in the course to analyse the real
cases
• Presentations at the end of each week
• A progressive process, but final reports (maybe)
with specific focuses
• Individual oral exams?
Some questions
• What do logistics and supply chain
mean?
• What are the differences between
them?
• Why are they important to companies?
• What are the basic concepts of LSCM?
• What is the GOOD supply chain?
• How to manage logistics and supply
chain from a company’s perspective?
• …
History of logistics
History of logistics
• As early as 1915, Arch Shaw stated
“The relations between the activities of demand creation
and physical supply … illustrate the existence of the
two principles of interdependence and balance.
Failure to co-ordinate any one of these activities with its
group-fellows and also with those in the other group, or
undue emphasis or outlay put upon any one of these
activities, is certain to upset the equilibrium of forces
which means efficient distribution.”
• Almost 100 years for these basic principles of
logistics management to be widely accepted
What is logistics?
Logistics is the process of strategically
managing the procurement, movement and
storage of materials, parts and finished
inventory (and the related information flows)
through the organisation and its marketing
channels in such a way that current and
future profitability are maximised through the
cost-effective fulfilment of orders
What is supply chain
management?
• Logistics
o A planning orientation and framework that seeks to create a
single plan for the flow of products and information through a
business
• Supply chain management
o Builds upon this framework and seeks to achieve linkage and
coordination between the processes of other entities in the
pipeline, i.e. suppliers, customers, and organisation
• Difference
o A significant change from the traditional arm’s-length, even
adversarial, relationships
o Co-operation and trust and the recognition that, properly
managed, the ‘whole can be greater than the sum of its
parts’
What is supply chain
management?
The management of upstream and
downstream relationships with suppliers
and customers in order to deliver
superior customer value at less cost to
the supply chain as a whole
• The focus of supply chain management
o The management of relationships
o Demand chain management
o From chain to network
What is supply chain
management?
• A network of connected and interdependent
organisations mutually and co-operatively working
together to control, manage and improve the flow
of materials and information from suppliers to end
users
LSCM and competitive
advantage
• The central theme
o Effective logistics and supply chain management can
provide a major source of competitive advantage
• Cost advantage
o A lower cost profile
• Value advantage
o The product or offering a
differential ‘plus’ over
competitive offerings
Cost advantage and
LSCM
• Cost advantage: Big is beautiful
o Economies of scale: fixed costs to be spread over a greater
volume
o Experience curve: improvements in the rate of output of
workers as they became more skilled in the processes and
tasks on which they were working
• Outside the four walls of the
business in the wider supply
chain
• LSCM can provide a multitude
of ways to increase efficiency
and productivity and hence
contribute significantly to
reduced unit costs
Value advantage and
LSCM
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Customers don’t buy products, they buy benefits
Additional values to the offering
Brand or corporate image or technology
Means of gaining value differentiation
o A more segmented approach to the market
• Different groups of customers within the total market
attach different importance to different benefits
o Service
• Delivery service, after-sales services, financial
packages, technical support and so forth
Seeking the high ground
• Cost leadership
o Traditionally economies of
scale and experience curve
o Now through logistics and
supply chain management
• Value leadership
o Service-sensitive
o Greater responsiveness and
reliability from suppliers
o Reduced lead times, just-intime delivery and valueadded services
Seeking the high ground
by LSCM
• LSCM
o In the past, managing the
goods flow as a series of
independent activities
o Now, planning and coordinating the materials flow
from source to user as an
integrated system
o The goal is to link the
marketplace, the distribution
network, the manufacturing
process and the procurement
activity in order that customers
are serviced at higher levels
and yet at lower cost
The scope of logistics
management
• The scope of logistics
o Spans the organisation, from the management of raw
materials through to the delivery of the final product
o A total systems viewpoint: satisfy the needs of customers
through the coordination of the materials and information
flows that extend from the marketplace, through the firm
and its operations and beyond that to suppliers
The mission of logistics
management
• Logistics management
o Fundamentally a planning concept that seeks to create a
framework through which the needs of the marketplace
can be translated into a manufacturing strategy and plan,
which in turn links into a strategy and plan for procurement
o Ideally a ‘one-plan’ mentality within the
business which seeks to replace the
conventional stand-alone and separate
plans of marketing, distribution,
production and procurement
Supply chain and
competitive performance
• The supply chain
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The network of organisations
Through upstream and downstream linkages
In the different processes and activities
Produce value in the form of products and services in the
hands of the ultimate consumer
• Supply chain management
o Simply transferring costs upstream or downstream does not
make them any more competitive
o Real competition is not company against company but
rather supply chain against supply chain
o Not vertical integration, but offshore and/or outsource
Functional
independence
Logistics management
Limited
integration
End-to-end
planning
Supply
chain
integration
Changing competitive
environment
• Challenges in the area of logistics and supply chain
management
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The new rules of competition
Globalisation of industry
Downward pressure on price
Customers taking control
New rules of competition
• From isolated and independent to supply chain
competition
• Past
o Strong brands backed up by large advertising budgets
and aggressive selling
• Now
o Core processes: new product development, supplier
development, order fulfilment and customer management
o The order-winning criteria are more likely to be servicebased than product-based
o Product or technical features are of less importance in
winning orders than issues such as delivery lead times and
flexibility
New rules of competition
• Shorter product life cycle
o Creates substantial problems
for logistics and supply chain
management
• Strategic lead time
o The time taken from the
drawing board, through
procurement, manufacture
and assembly to the end
market
• Logistics and supply chain
o Flexible and responsive
Globalisation of industry
• Materials and components are sourced worldwide and
products may be manufactured offshore and sold in many
different countries
• Lengthen supply chains as companies increasingly move
production offshore or source from more distant locations
• LSCM becomes an
issue of central
concern
• Excellence in
managing the
complex web of
relationships and flows
• Time-based
competition
Downward pressure on
price
• Global competitive landscape => price down
o New global competitors who have entered the
marketplace supported by low-cost manufacturing bases
o The removal of barriers to trade and the deregulation of
many markets
o The Internet making price comparison so much easier
o Others, such as many retailers’ own-label products
Downward pressure on
price
• Definition of cost is
limited only to
those costs that are
contained within
the four walls of
their business entity
• Cost reduction lies
in the wider supply
chain rather than in
the firm’s own
internal operations
• Outsource
JIT, lean etc.
Customers take control
• ‘Commodity’ markets
o Customer perceives little technical difference between
competing offers
o Creation of differential advantage through added value
• The customer: not just product, but also service
o Products don’t have value until they are in the hands of
the customer at the time and place required
o Customer service: from on-time delivery through to aftersales support; value-in-use
o Differentiation of total offer (the core product plus the
service package)
o Managing the logistics of service deliver
o A combination of a carefully thought-out strategy for
service, the development of appropriate delivery systems
and commitment from people
Managing the “4Rs”
• A number of principles emerge to guide the supply
chain management
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Responsiveness
Reliability
Resilience
Relationships
Responsive
-ness
Resilience
Reliability
Relation
-ships
Responsiveness
• Solution: Agility
o The ability to move quickly
and to meet customer
demand sooner
o Demand-driven
o Across supply chain
• Responsiveness
o The organisation is close to
the customer, hearing the
voice of the market and
quick to interpret the
demand signals it receives
Reliability
• Uncertainty
o About future demand
o About supplier’s ability to meet a delivery promise
o About the quality of materials or components
• Improvements in supply chain reliability
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Re-engineering the processes that impact performance
Process control
Reducing process variability
Six sigma methodologies
Resilience
• Beyond cost minimisation and service optimisation
• Marketplace with higher turbulence and volatility
• Resilience
o The ability of the supply chain to cope with unexpected
disturbances
• Characteristics of resilient supply chain
o Not be the lowest-cost, but capable of coping with the
uncertain business environment
o A business-wide recognition of where the supply chain is at
its most vulnerable
o Recognition of the importance of strategic inventory and
the selective use of spare capacity to cope with ‘surge’
effects
Relationships
• Reduce supplier base
• Partnership outsourcing is widespread
o From the customers’ perspective, improved quality,
innovation sharing, reduced costs and integrated
scheduling of production and deliveries
o From the suppliers’ perspective, prove formidable barriers
to entry for competitors
• Supply chain management
o By definition is about the management of relationships
across complex networks of companies
o A constant search for win-win solutions based upon
mutuality and trust
Summary
• History of logistics
• What is logistics? What is supply
chain management?
• LSCM and competitive advantages
• The scope/mission of logistics
management
• Supply chain and performance
• Changing competitive environment
• 4R (responsiveness, reliability,
resilience, and relationships)