Riphah School of Leadership

Faculty of Management Sciences

Riphah International University
Islamabad
› Dr. Shahzad Ahmad Khan
› Assistant Professor
› HoD (Undergraduate Programs)
› Email: shahzad.ahmad@riphah.edu.pk

CHAPTER :1
Logistics and the Supply Chain
What is Logistics?

logistics is the process of planning, implementing

and controlling procedures for the efficient and
effective transportation and storage of goods
including services and related information from the
point of origin to the point of consumption for the
purpose of conforming to customer requirements.
“Council of Logistics Management”
Basic Logistics

Md.Ahsan Habib,Asistant Prof.

Dept of TEM, BUTex
Why logistics?
In enterprises, logistics impacts:
Cost: For many products, 20% to 40% of total
product costs are controllable through
logistics costs.
Service: For many products, performance factors
such as inventory availability and speed of
delivery are critical to customer satisfaction.
What is a Supply Chain?
 What is a Supply Chain?
• All stages involved, directly or indirectly, in fulfilling a
customer request. Includes, suppliers, manufacturers,
transporters, warehouses, retailers, and customers.
• is the flow of materials, information, and finances as
they move in a process from supplier to manufacturer
to wholesaler to retailer to consumer.
• Within each company, the supply chain includes all
functions involved in fulfilling a customer request
(product development, marketing, operations,
distribution, finance, customer service)
• involves coordinating and integrating these flows both
within and among companies.
How does Logistics differ from SCM?
• Logistics Management is a small portion of Supply Chain
Management that deals with the flow and storage of goods
inside and outside the firm is known as Logistics Although,
Supply Chain Management, it is a broader term which refers
to the connection, right from the suppliers to the ultimate
consumer.
• Supply chain management deals with integration of all
partners in the value chain.
• There is only one organization involved in Logistics while a
number of organizations are involved in Supply Chain
Management.
• Logistics is essentially a framework that creates a single plan
for flow of products and information through a business.
• Supply chain builds upon this framework and seeks to
achieve linkage and coordination between processes of
other entities in the pipeline i.e. suppliers and customers,7
and organization itself.
Macro Process in SCM
 Logistics Functions

Purchasing / Facility Location /

Procurement Network Design
Inventory Control Transportation
Warehousing
Customer Service
Materials Handling
Order Processing
 A List of Approaches in Log.
Management
• Just in Time Inventory • Build to Order
• Vendor Managed Inventory • SC Visibility Software
• Quick Response • Internet / EDI
• Collaborative Planning, • Collaborative Transportation
Forecasting, and Replenishment Management
• Outsourcing / 3PLs • Partnerships / Alliances
• Cross-docking
 SUPPLY ACTIVITIES

Incoming Outgoing Marketing

Production Service
logistics logistics Sales
 SUPPLY ACTIVITIES
Increasing competition will change the fashion
supply chains and in the future they will have
the following characteristics:
• Short lead times
• Low or no inventories
• Continuous design and manufacturing
• Demand driven
• Fast to the market
 Managing the supply chain
• Purchasing and supply deals with the focal firm’s
immediate suppliers.
• Physical distribution deals with the task of
distributing products to tier 1 customers.
• Logistics refers to management of materials and
information. Inbound logistics deals with links
between the focal firm and its tier 1 suppliers,
while outbound logistics refers to the links
between focal firm and it’s tier 1 customer.
Supply Chain Network
• The ‘Supply chain’ and ‘ supply network’ both attempt
to describe the way in which buyers and suppliers are
linked together to serve the end-customer.
• A basic view of network are linked by upstream
supplier and downstream customers.
• Material flow and information flow to this basic
model, and place a boundary around the network is
shows the supply chain network in context.
• A network of connected and interdependent
organizations mutually and co-operatively working
together to control, manage and improve the flow of
materials and information from suppliers to end users.
 Integrated Logistics

Inventory Flow

Physical Manufacturing
Customers Procurement Suppliers
distribution support

Information Flow
Material flow :
The aim within a supply chain must be to keep
materials flowing from source to end-
customer. The time dimension suggests that
parts are moved through the supply chain as
quick as possible.
Information flow :
By sharing the end customer demand information
across the supply chain, which create demand chain,
directed at providing enhanced customer value.
Information technology and systems enable ‘Demand
Chain Management ‘
Integrating demand and supply data throughout the
supply chain increasing competitive advantage.
The greatest opportunity for meeting demand in the
marketplace with a maximum of dependability and a
minimum of inventory come from implementing
such integration across the supply chain.
 Logistics for competitiveness
Quality
Ø The end product does what it is supposed to do?
Ø Defects and late deliveries are losses customer’s loyalty.

Time
Ø Managing lead times
Ø Responsiveness

Cost
Ø Logistics cost vs. production cost?
Ø Logistics cost vs. capital cost vs. customer service level?
 Time Advantages
• Time measures how long a customer has to wait
in order to receive a given product or service.
• The time advantage is described variously as
speed or responsiveness in practice.
• Speeding up Supply chain processes may help to
reduce the risk of obsolete or over-aged stock in
the system or to improve freshness of the end
product.
 Creating logistics advantage: controlling
variability

• Variability undermines the dependability with which a

product or service meets target.
 Order winners and order qualifiers
Different logistics
performance objectives

Order winners Order qualifiers

are factors that directly and
significantly help products to
win orders in the marketplace.
Customers regard such factors
as key reasons for buying that
product or services.
are factors that are regarded by
the market as an ‘entry ticket’.
Unless the product or service
meets basic performance and
standards.
Logistics Strategy
Logistic strategy is the set of guiding principles, driving forces
and ingrained attitudes that help to coordinate goals,
plans and policies and which are reinforced through
conscious and subconscious behavior within and between
partners across a network
 Logistics Strategy
Usually demands systemic strategy setting between
network partners
Porter describes five principles:
• a unique value proposition
• a tailored supply chain
• identify the trade-offs
• align logistics processes
• continuity – improvements consistently
 Logistics Strategy
• Long-term planning
• Comprehensive and coordinated
Alignment – supply chain links directed
towards same priorities

• Integration needs strategic planning

• Focus – differentiation
Thanks