SUPPLY CHAIN/LOGISTICS OVERVIEW

FOR TIPQC LM 393 STUDENTS

Chapter 2Management of Business Logistics, 7th Ed.

2

Learning Objectives Understand the role and importance

of logistics in organizations. Discuss the impact of logistics on the

economy and how effective logistics management contributes to the vitality of the economy.

Understand the value-added roles of logistics on both the macro and micro level.

Explain logistics systems from several perspectives.

Chapter 2Management of Business Logistics, 7th Ed.

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Learning Objectives

Understand the relationship between logistics and the other important functional areas in a company, including manufacturing, marketing, and finance.

Discuss the important management activities in the logistics function.

SUPPLY CHAIN/LOGISTICS OVERVIEWTOPICS FOR DISCUSSION

1. DEFINITION & CONCEPTS• SUPPLY CHAIN MGMT• LOGISTICS MGMT• PHYSICAL DISTRIBUTION

2. SUPPLY CHAIN FLOW DIAGRAM

SUPPLY CHAIN MANAGEMENT

The art and science of managing the flow of materials and products from source to

user.

Trucking Receiving

Quality Inspection InventoryManagement

Manufacturing PlantMuntinlupa

Importers/ TradersSuppliers Receiving

Putaway

CUSTOMERS

Picking

Trucking

Trucking

Trucking

Trucking

Trucking

Trucking

Inbound Receiving Job Order

Sales Order

Ready for Dispatch

BAX Warehouse Management System - EXCEED

PCPPI Inventory and Order Management System– MRIS and PDIS

Product FlowInformation Flow

ePOD System

Picking Sorting / Packing

Visibility , Synchronicity , Velocity

Importers/ Traders

Importers/ Traders

LOGISTICS MANAGEMENT - DEFINITION

Logistics is the management of the flow of goods, information and other resources, including energy and people, between the point of origin and the point of consumption in order to meet the requirements of consumers (frequently, and originally, military organizations).

Logistics involves the integration of information, transportation, inventory, warehousing, material-handling, and packaging, and occasionally security.

Logistics is a channel of the supply chain which adds the value of time and place utility.

LOGISTICS MANAGEMENT – ORIGIN

The term "logistics" originates from the ancient Greek "λόγος" ("logos"—"ratio, word, calculation, reason, speech, oration").

Logistics is considered to have originated in the military's need to supply themselves with arms, ammunition and rations as they moved from their base to a forward position.

In ancient Greek, Roman and Byzantine empires, there were military officers with the title ‘Logistikas’ who were responsible for financial and supply distribution matters.

LOGISTICS MANAGEMENT – ORIGIN

The Oxford English dictionary defines logistics as: “The branch of military science having to do with procuring, maintaining and transporting material, personnel and facilities.

”Another dictionary definition is: "The time related positioning of resources." As such, logistics is commonly seen as a branch of engineering which creates "people systems" rather than "machine systems."

Chapter 2Management of Business Logistics, 7th Ed.

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What is Logistics?

Popular logistics terms: Logistics Management Business Logistics Management Integrated Logistics Management Materials Management Physical Distribution Management Marketing Logistics Industrial Logistics Distribution

Chapter 2Management of Business Logistics, 7th Ed.

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Logistics Activities

Transportation Storage Packaging Materials handling Order fulfillment Forecasting

Production planning

Purchasing Customer service Site location Other activities

PHYSICAL DISTRIBUTION

Refers to the portion of a Logistics System concerned with the

outward movement of materials from the Plants to the Sales

Offices

PHYSICAL DISTRIBUTION - DEFINITION

Physical distribution is the set of activities concerned with efficient movement of finished goods from the end of the production operation to the consumer.

Physical distribution takes place within numerous wholesaling and retailing distribution channels, and includes such important decision areas as customer service, inventory control, materials handling, protective packaging, order procession, transportation, warehouse site selection, and warehousing.

Physical distribution is part of a larger process called "distribution," which includes wholesale and retail marketing, as well the physical movement of products.

PHYSICAL DISTRIBUTION

KEY OBJECTIVE

To contribute to the efficient and profitable operation of the Company by ensuring the

right quantity of products at the Sales Offices at the right time and employing optimum

quality and cost.

INTEGRATED LOGISTICS & SUPPLY CHAIN

SUPPLIERS’ SUPPLIER

LOGISTICS/ SUPPLIER MATERIALS MGM’T

SUPPLY CHAINMANUFACTURER

DISTRIBUTOR DISTRIBUTION MGM’T

TRADE CHANNELS

CONSUMERS

Chapter 1Management of Business Logistics, 7th Ed.

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A View of Business Logistics in a Firm

Chapter 1Management of Business Logistics, 7th Ed.

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Integrated Logistics Management

Chapter 1Management of Business Logistics, 7th Ed.

18Generic Value Chain

Chapter 1Management of Business Logistics, 7th Ed.

19Logistics Supply Chain

Chapter 1Management of Business Logistics, 7th Ed.

20Integrated Supply Chain

TYPICAL COMPANY SUPPLY CHAIN FLOW DIAGRAM

SALES FORECASTING

PROD’NPLANNING

MAT’LSIPC

PROCUREMENT

IN-BOUND SHIPMENTS-

RAW/PACKAGINGMAT’LS

WARE-HOUSING

PLANT

OUT-BOUNDSHIPMENTS –

RAW/PACKGNGMAT’LS

SCRAPDISPOSAL

MFG/PROD’N

OUT-BOUNDSHIPMENTS-FIN GOODS

WAREHOUSINGSALES DEPOT

ORDERFULFILLMENT

ROUTE DISTRIBUTION/ SETTLEMENT

SALES FORECASTING –SALES & MARKETING

1. Establish Sales Volume Forecast AOP – Annual Operating Plan Trending

PRODUCTION PLANNING / SCHEDULING

2. Establish production schedules for the Plant and/or its Toll Packers considering

Sales Forecast Finished Goods Floor Stock Inventory Materials on hand

MATERIALS INVENTORY PLANNING & CONTROL

3. Compute Raw and Packaging Materials Requirements for:

Plant Toll Packers Other Provincial Plants

Relay Raw and Packaging Materials Requirements to Procurement

PROCUREMENT/ PURCHASING

4. Place Order for the Quantity of Items Needed Considering:

Price Supplier – Imported or Local Minimum Order Quantity Delivery Lead Times

INBOUND SHIPMENT OF RAW & PACKAGING MATERIALS – PLANT WHSE

5. Receive Raw/Packaging Materials Including Indirect Materials, Spare Parts and Marketing Collaterals Ensuring:

Proper documentation/recording in Computerized system of the quantity received

Coordinate with QA for quality checking/ acceptance

IN-PLANT WAREHOUSING

6. Store Received Items Ensuring these are Protected from:

Pilferage/Theft Spoilage/Expiration thru proper stock

rotation Weather elements/excessive dusts/ vermin

to ensure quality and prolonged freshness Optimization of storage space thru the use of

racking system

OUT-BOUND SHIPMENTS OF RAW/PACKAGING MATERIALS

7. Receive Weekly Material Request by the Plants, Consolidate and Ship to them in Time to Replenish their Buffer Stocks

Luzon Plants – Truckers VISMIN Plants – RORO and Container Vans using

local Shipping Lines

SCRAP SALE/DISPOSAL

8. Management of Scrap Disposal consisting of the following:

Setting the right disposal procedures and bidding process to identify and award scrap sale agreement

Managing the scrap buyer ensuring: Proper documentation of transactions That the scrap buyer collect and move out the

day’s accumulation of scrap materials Scrap area is kept clean and orderly

MANUFACTURING/ PRODUCTION

9.Produce/manufacture the products required by Sales following the schedule set by Plant PD

OUT-BOUND SHIPMENT OF FINISHED GOOD

10.Allocate Production Output to Provide for the needs of the Different Plants/Business Units/Sales Offices

Ship the Finished Goods Following the Product Allocation Set by the PD

SALES OFFICE OPERATIONS/ DELIVERY

11.Receive Finished Goods and Deliver these to the Customers as follows:

Process sales orders and allocate these to the delivery trucks

Load the trucks as per sales order Deliver the orders as per delivery list, collect

payment, retrieve and sort empties, settle and remit collections

TRANSPORT, TRAFFIC MANAGEMENT & LOG. SERVICE PROVIDER GROUPS NETWORKING – PD/CSSO/PAM

14.Coordinate and make proper representation with the Government and private agencies pertaining to PD/Logistics to ensure

Availability of truckers, forklift rental providers, warehouses, shipping lines, etc.

Trouble-free shipping operations in the area Availability of information regarding road

repairs, infrastructure projects, ships for dry docking, etc. that may affect shipping operations