Logistics & Supply Chain
Management (SCM)
Sense, Importance and Scope
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Logistics is…
• Logistics management 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-oforigin to the point-of-consumption in order to meet customers’
requirements.
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Steps of Logistics Development
• Phase I – Pre-business applications
• Dating from the Napoleonic Wars
• Refers to the technique of moving and quartering armies – quartermasters’
work
• Still applied for the NATO Allied forces
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Steps of Logistics Development, cont’d
• Phase II – Logistics supports marketing-mix
b) Trade-offs in marketing
a) Utility of place, time and possession
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Steps of Logistics Development, cont’d
• Phase III – Logistics integrates processes throughout
organizations
Value chain
Trade-offs
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Steps of Logistics Development, cont’d
• Phase IV – Supply chain management
Perspective of value management beyond single organizations!
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What Has Made Logistics
So Popular?
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Globalization and Outsourcing
Only 10-15%
is being produced
in Germany!
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Mass Customization
• Production of personalized or custom-tailored goods or
services to meet consumers' diverse and changing needs at near mass
production prices
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IT Development
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Reinvent!
TQM and ISO 9001 Experiences
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Financial impact of logistics
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Key Logistics Activities
• Demand forecasting
• Inventory management
• Logistics communication
• Materials handling
• Order processing
• Packaging
• Parts and service support
• Plant and warehouse site
selection
• Procurement
• Reverse logistics
• Traffic and transportation
• Warehousing and storage
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Contemporary Logistics Scope
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Supply Chain
• A supply chain is that network of independent organizations that are
involved, through upstream and downstream linkages, in the different
processes and activities that produce value in the form of products
and services in the hands of the ultimate customer
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Key Characteristics od Supply Chains
• They’re networks instead of loosely linked associations of discrete
businesses
• Linkages – coordinating supply chain processes and relationships
• The linkages go both downstream and upstream
• Based on process orientation
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Why To Integrate Supply Chains?
To save
money
To enhance
value for
customer
17
Less inventories –
the chosen way
how to save money…
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Key Success Factors…
• For establishing and developing the successful supply
chain..?
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Levels of SCM Integrity
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Logistics Parties
2PL
3PL
4PL
1PL
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First Party Logistics (1PL)
• A First-party logistics provider (abbreviated 1PL) is a firm or an
individual that needs to have cargo, freight, goods, produce or
merchandise transported from a point A to a point B. The term firstparty logistics provider stands both for the cargo sender and for the
cargo receiver.
22
Second Party Logistics (2PL)
• A Second-party logistics provider (abbreviated 2PL) is an assetbased carrier, which actually owns the means of transportation
•
•
•
•
•
shipping lines, which own, lease, or charter their ships,
airlines, which own, lease, or charter their planes,
truck companies, which own, or lease their trucks,
rail companies, which own their trains,
warehouse owners.
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Third Party Logistics (3PL)
• A firm provides multiple logistics services for use by customers.
Preferably, these services are integrated, or bundled together, by the
provider.
• Among the services 3PLs provide are transportation, warehousing, crossdocking, inventory management, packaging, and freight forwarding.
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Third Party Logistics (3PL), cont’d
• Third-party logistics providers
• freight forwarders
• courier companies
• other companies integrating & offering subcontracted logistics and
transportation services
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Fourth Party Logistics (4PL)
• A Fourth-party logistics provider (abbreviated 4PL), lead logistics
provider, or 4th Party Logistics provider, is a consulting
firm specialized in logistics, transportation, and supply chain
management.
• NON-ASSET BASED!
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Logistics Customer Service
The Interface of Marketing and Logistics
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The levels of a regular product
• CORE product is the BENEFIT of
the product that makes
it valuable to you.
• The ACTUAL product is the
tangible, physical product. You
can get some use out of it.
• The AUGMENTED product is the
non-physical part of the product.
It usually consists of lots of
added value, for which you may
or may not pay a premium.
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The Pareto Principle (or 80/20 Rule)
Source:
http://www.effective-time-management-strategies.com/paretoprinciple.html
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Key Success Factors
• "The limited number of areas in which results, if they
are satisfactory, will ensure successful competitive
performance for the organization.
• They are the few key areas where things must go right
for the business to flourish.
• If results in these areas are not adequate, the
organization's efforts for the period will be less than
desired."
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What is KSFs Analysis?
• KSFs analysis leads to make The factors :
• Recognized
• Ranked
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Where To Find..?
• Finance
• Marketing
• Product Development
• Operations
• ………….
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How To Find..?
• Brainstorming led to have filled the sentence:
If we ……………………………………………………
then we will be successful
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How To Analyze..?
• In pairs analysis
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How To Present..?
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Options of KANO Model
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Incremental costs or incremental revenue
Maximum
incremental
profit
Incremental customer service
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