INPUTS OUTPUTSOPERATIONS

•People •Buildings •Raw materials•Equipments •Information•Investment •Etc.

•Goods •Services •Profits •Waste •Wages •Etc.

•Manufacture •Serve •Supply •Transport •Sell •Train •Etc.

OPERATIONS RESULTS IN OUTPUT

DEMAND AND SUPPLY CYCLE

CUSTOMERS

SUPPLY OF PRODUCTS

DEMAND FOR PRODUCTS

OPERATIONS

OTHER INPUTS

OTHER OUTPUTS

PASSED TO CREATE

PASSED TOARRANGE

ROLE OF LOGISTICS

Internal supplier

Internal customer

Operations within the organizationExternal supplier External customer

Materials Management

Outbound

LogisticsInbound

Logistics

Logistics

LOGISTICS

• Logistics is the function responsible for the flow of materials from suppliers into an organization, through operations within the organization, and then out to customers.

• The supply system includes the process of planning, implementing, and controlling the efficient, effective flow and storage of goods and services from the organization from its place of production to the place where it is required. This supply system is referred as ‘Logistics Management’.

MATERIALS

• Materials are all the things that an organization moves to create its products. These materials can be tangible (such as raw materials) and intangible (such as information).

Seedling Young Tree Mature Tree Logs

Final Customer

Small roll of Finished paper

Large roll of paper

Sheets of paper Packer Wholesaler Retailer

Raw Paper Wood Pulp

Grown by gardener

Planted by

forester

Felled by

logger

Chipped

ProcessedProcessedFinishing

Cutting

Transport Transport Transport

Purchase

SUPPLY CHAIN FOR PAPER

EXAMPLE OF SUPPLY CHAIN

WholesalerManufacturer Retailer

Supplier

Supplier

Customer

Customer

PROCESS OF SUPPLY CHAIN INTEGRATION

Deliver Source Make Deliver Source Make Deliver Source Deliver Make Source

Sub-supplier

Supplier Enterprise Customer Sub-customer

Enterprise Systems

SUPPLY CHAIN OF MILK

FARMMILKTANKER

COLLECTION

Supplier

Supplier

Customer

Customer

DAIRY

Supplier

BOTTLING PLANT

Customer

supplier

Customer

SUPER MARKET

DISTRIBUTER

Customer

Customer

CustomerSupplierSupplier

SUPPLY CHAIN MANAGEMENT - DEFINITION

• A supply chain consists of activities and materials that organizations move through on their journey from initial suppliers to final customers.

• As goods and services flow from supplier to producer to customer to final user, supply chain management is concerned with the interfaces between organizations.

• SCM is the management of linkages between organizations.

• SCM is a network of the manufacturer’s suppliers, and supplier’s suppliers on the one hand and customers and customer’s customers on the other hand. This network exists to ensure a free and smooth flow of information, goods, services and profits among all its participants.

OBJECTIVES OF SUPPLY CHAIN

• To reduce the physical supply chain links;

• To define supply chain responsibilities to a core service competency

• To decrease the time and cost of getting end user customer products in required quantity at the place of requirements.

ACTIVITIES IN A SUPPLY CHAIN

Initial Supplier

3rd tier Supplier

2nd tier Supplier

1st tier Supplier

Organization

1st tier customer

2nd tier customer

3rd tier customer

Final customer

Upstream activities

Downstream activities

SUPPLY CHAIN AROUND A MANUFACTURER

3rd tier Supplier

2nd tier Supplier

1st tier Supplier

Manufacture

1st tier customer

2nd tierl customer

3rd tierl customer

Material Supplier

Component Supplier

Sub-assembly Supplier

WholesalersRetailersEnd users

SUPPLY CHAIN STAGES

SupplierWholesaler/ Distributor

Retailer Customer

Retailer Customer

Wholesaler / Distributer

Supplier

Supplier Wholesaler / Distributor

Customer Retailer

Manufacturer

Manufacturer

Manufacturer

SUPPLY CHAIN STAGES-EXAMPLE OF CONSTRUCTION ACTIVITIES

ACC Refractory,

Wholesaler/ Distributor

RetailerAnsal

Builder

RetailerUnitech,

DLF

Wholesaler / Distributer

Supplier

Indian OilWholesaler / Distributor

Customer Retailer

ManufacturerL&T

Ultracement

Manufacturer

Manufacturer Saurashtra

cementHathi Cement

MOVEMENT WITHOUT A WHOLESALER

Factories

24 routes

customers

MOVEMENT WITH A WHOLESALER

Factories

3 routes inwards

customers

WHOLESALER

8 routes outwards

Using intermediaries simplifies the supply cahin

BENEFITS OF WELL DESIGNED SUPPLY CHAIN -1

1. Best location of operations, regardless of the location of customers.

2. Concentrating operations in large facilities, benefits of economies of scale obtained.

3. Producers do not keep large stocks of finished goods, as the same are kept down the supply chain nearer to customers.

4. Higher price discounts to wholesalers due to large order size.

BENEFITS OF WELL DESIGNED SUPPLY CHAIN - 2

1. Wholesaler keeps stocks of many suppliers, giving retailers a choice of goods.

2. Wholesalers are near to retailers and have short lead time.

3. Retailers carry less stocks as wholesalers provide reliable deliveries.

4. Retailers can have small operations, giving a responsive service near to customers.

5. Transport is simpler with fewer, larger deliveries thus reducing costs.

6. Organization can develop expertise in specific types of operations.

ACTIVITIES OF LOGISTICSProcurement /

purchasingInward

transportReceiving Warehousing

Stock control Order picking Materials handling

Outward transport

Physical distribution of finished goods

Recycling,returns, and

waste disposal

Locations communication