Introducing Logistics &
Supply Chain Management
Compiled by Rulzion Rattray
Logistics (Christopher, M. 1998)
• Logistics is the process of strategically
managing the procurement, movement and
storage of materials, parts and finishing
inventory (and the related flows of
information) through the organisation and
its marketing channel in such a way that
current & future profitability are
maximised through the cost-effective
fulfilment of orders.
The Resource Environment
The Value Chain Michael Porter (1985)
Firm’s Infrastructure
Human Resource Management
Secondary
Activities
Technology Development
Procurement
Inbound
Logistics
Outbound
Operations
Logistics
Marketing Service
& Sales
Primary Activities
Resource Environment
The Value Chain Michael Porter (1985)
Firm’s Value
chain
Supplier
value
chains
Channel
value
chains
Customer
value
chains
Supply Chain Management
• The management of upstream and
downstream relationships with suppliers &
customers to deliver superior customer
value at less cost to the supply chain as a
whole. (Christopher, M. 1998)
• A network of connected & interdependent
organisations mutually & cooperatively
working together to control, manage and
improve the flow of materials and
information from suppliers to end users.
(Aitken, J., 1998)
Mission of Logistics Management
• Scope of logistics spans the organisation
Material Flow
Suppliers
Procurement
Operations
Distribution
Customers
Requirements Flow
• Means by which customers are satisfied
through coordination of material &
information flow
Supply Chain and Performance
• Supply chain is the network of organisations
that are involved through upstream or
downstream linkages.
• Traditionally most organisations see
themselves as separate entities
• Traditionally Logistics management has
been concerned with flow within the
organisation.
Achieving an Integrated Supply Chain
Stage 1
Material Flow
Purchasing
Material
Control
Customer Service
Production
Sales
Stage 2
Material Flow
Material
management
Customer Service
Manufacturing
management
Distribution
Stage 3
Material Flow
Material
management
Customer Service
Manufacturing Distribution
management
Stage 4
Material Flow
Suppliers
Distribution
Internal
Supply chain
Customer Service
Customers
Increasing Complexity
• At the end of the second world war there was a
global shortage of manufactured goods.
• Today At the beginning of the third millennium
there is an oversupply.
• Firms shop freely amongst the nations
• In 1991, for the first time, companies spent
more money on computing and
communications gear than the combined
moneys spent on industrial, mining, farm, and
construction equipment.
Organisational Integration
• Increasing requirement of integration will
require generalists who can manage
processes.
• Knowledge of systems theory and systems
thinking will be a requirement for these
generalist mangers.
• We are entering an era of supply chain
competition
Rules of Competition
• Competitive advantage achieved by a
combination of product excellence and
process excellence.
• Responsiveness and agility
• Reliability in logistics this will require
enhanced pipeline visibility
• Relationships trend towards customers
seeking to reduce supplier base?
References
• Aitken, J., “Supply Chain Integration within the Context of a
Supplier Association”, Cranfield University PHD Thesis, 1998.
Cited in Christopher, M., (1998), “Logistics and Supply Chain
Management. Strategies for Reducing Cost and Improving
Service”, Financial Times Pitman Publishing, London.
• Christopher, M., (1998), “Logistics and Supply Chain
Management. Strategies for Reducing Cost and Improving
Service”, Financial Times Pitman Publishing, London
• Porter ME 1979, “How Competitive Forces Shape Strategy”,
Harvard. Business Review March/April 1979.
• Porter ME 1985, Creating & Sustaining Superior Performance,
Free Press.