Logistics and Supply chain Management

Click to edit Master subtitle style Dr. A.Shakuntala

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Logistics Positioning

Logistics Positioning is concerned with alternative ways that logistics can be deployed as a core competency of a firm.

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Logistics Positioning
The various topics relevant to logistics positioning are:
1. 2. 3. 4. 5. 6.

Logistics reengineering Logistics environment assessment Time based logistics Alternative logistics strategies Strategic integration and

Logistics time-based control 7/2/12

Logistics Reengineering

It provides a framework for implementing system integration principles. Its basic idea is to identify and study the steps required to perform specific work so as to increase the possibility of integrating performance.

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Logistics Reengineering
All Logistics Reengineering initiatives have four common factors.

System Integration The logic of systems analysis forms the foundation for logistics reengineering.

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Logistics Reengineering

Benchmarking consists of a systematic procedure for identifying the best practice and modifying actual knowledge to achieve superior performance. Activity Based Costing it is critical to develop meaningful metrics to measure existing practice and evaluate the relative attractiveness of alternatives. 7/2/12

Logistics Reengineering

The standard six-step procedure to guide a firms reengineering initiative: Target identification Detailing and developing metrics Internal analysis External benchmarking Evaluation

1. 2. 3. 4. 5.

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Logistics Environmental Assessment

The purpose of considering environmental impact, when formulating logistical strategy is to assess the varied direction and the rate of change related to planned logistical operations. A range of forces external to the enterprise limit the flexibility of logistical operations.
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Logistics Environmental Assessment

The type of environmental factors that should be considered are: Inflation Interest rates Energy Population Households

1. 2. 3. 4. 5. 6.

Transportation regulations 7/2/12

Logistics Environmental Assessment

These forces include Industry- competitive assessment Geo market differentials Technology assessment Material-energy assessment Channel structure

1. 2. 3. 4. 5.

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Logistics Environmental Assessment

6. Economic-social projections 7. Service industry trends and 8. Regulatory posture.

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SOURCING
Sourcing Decisions in Supply Chain Management:

Sourcing decisions are high level, strategic decisions regarding what products or services to provide internally and what products to obtain from external supply chain partners. Purchasing includes all those activities associated with identifying needs , locating and selecting suppliers negotiating terms and follow up to ensure 7/2/12

SOURCING DECISIONS

Sourcing decisions that address which products and services will be provided using resources within the firm (known as insourcing) and which will be provided by a firms supply chain partners (known as outsourcing). The sourcing decision is also called as make-or-buy decision.
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SOURCING DECISIONS

Purchasing or procurement is the process by which firms acquire raw materials, components, products, services or other resources from suppliers to execute their operations, sourcing refers to the entire set of business processes required to purchase goods and services.
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Insourcing

Advantages: High degree of control Ability to oversee the entire process Economies of scale and/or economies of scope.

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Insourcing

Disadvantages: Reduced strategic flexibility High capital investment Loss of access to superior products/services offered by potential suppliers.

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Outsourcing

Advantages: High strategic flexibility Low investment risk Improved cash flow Access to state-of-the-art products services

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Outsourcing

Disadvantages: Possibility of choosing a bad supplier Loss of control over the process and core technologies Communication and coordination may be difficult

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Key Sourcing Related Process

Supplier scoring and assessment Supplier selection Design collaboration Procurement Sourcing planning and analysis

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Sourcing Strategies

Once the decision has been made to outsource a product or service, the buying firm has to choose between

1. single sourcing 2. multiple sourcing

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Sourcing Strategies

In single sourcing, the buying firm depends on a single supplier for all or nearly all of a particular item or service. In multiple sourcing, the buying firm shares its business across multiple suppliers for the same item or service.
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Guidelines for Sourcing

Product lifecycle duration Product variations Labour content Intellectual property content Transportation cost Product value Security
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TRANSPORTATION

Transportation refers to the movement of products from one location to another, from the beginning of a supply chain to the final customer. Transportation cost is a significant component of the total costs incurred by most supply chain.
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TRANSPORTATION
The selection mode of transportation or service offering within a mode of transportation depends on a variety of service characteristics such as

Freight rates Reliability Transit time Loss, damage, claims processing and tracing 7/2/12

TRANSPORTATION

Shipper market considerations and Carrier considerations

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TRANSPORTATION
The Role of Transportation in Logistics:

The movement of materials from one place to another adds value to materials which is referred to as place utility. Time utility is created by warehousing and storing materials and finished goods until they are 7/2/12 needed.

TRANSPORTATION

Transportation determines how fast and how consistently a product or material moves from one place to another. This is known as time-intransit and consistency of service.

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Characteristics of Transportation
Characteristics of Transportation Modes and Selection:

The choice of transportation mode depends on the : Nature of goods Access to carriers Price Speed or transit time Security of goods
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Government regulations

Carrier Characteristics and Selection

The general criteria for carrier selection are discussed below: Price Accessibility Responsiveness Claims Record Reliability
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Revenue Management

The use of pricing to increase the profit generated from a limited supply of supply chain assets is known as revenue management. Two forms of supply chain assets are: Capacity and Inventory

1. 2.

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Revenue Management
Firms use targeted differential pricing to be successful in revenue management.

The value of the product varies in different market segments. The product is highly perishable or product wastage occurs. Demand has seasonal and other peaks

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Revenue Management
Using Pricing and Revenue Management in Practice:
1.

Evaluating the Firms Market Carefully Quantifying the Benefits of Revenue Management Implementing a Forecasting Process

2.

3. 4.

Applying optimisation to obtain the Revenue Management Decision 7/2/12

Revenue Management
5. Involving both sales and operations in Revenue Management 6. Understanding and Informing the Customer 7. Integrating Supply Planning with Revenue Management.

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