LOGISTICS MANAGEMENT
Asst. Prof. Dr. Gül Denktaş Şakar
MARKETING CHANNELS
LOGISTICS AND SUPPLY CHAIN MANAGEMENT
To start with….
“Logistics and supply chain management are not new ideas. From the building of the
pyramids to the relief of hunger in Africa, the principles underpinning the effective flow of
materials and information to meet the requirements of customers have altered a
little”
Before discussing the supply chain management concept, we need to understand the marketing channels…
• “sets of interdependent organizations involved in the process of making a product or service available for use or consumption.”
• Ownership channel
– Manufacturers – Wholesalers – Retailers
PRODUCTION/ OPERATIONS Sample activities: • Quality control • Detailed production scheduling • Equipment maint. • Capacity planning • Work measurement & standards LOGISTICS Sample activities: •Transport • Inventory • Order processing • Materials handling Interface activities: • Product scheduling • Plant location • Purchasing MARKETING Sample activities: • Promotion • Market research • Product mix • Sales force management Interface activities: • Customer service standards • Pricing • Packaging • Retail location Production-logistics interface Marketing-logistics interface
Internal Supply Chain
Relationship of Logistics to Marketing and Production
Five Business Systems - Tightly Interconnected Within The Organization
Measuremen t Decisions Manageme nt Systems Reward Decisions Strategic Decisions Transportation Decisions Sourcing Decisions Inventory Decisions Logistics Systems
{
PriceDecisions Promotion Decisions Marketin
g Systems Product Decisions Place (How, where, how much)
}
Production Scheduling Decisions Production Capacity Decisions Shop Floor Decisions Manufacturin g Systems}
Product Design Decisions Process Design Decisions Engineering Systems}
Product Price Promotion Place-Customer service levels Inventory carrying costs Lot quantity
costs Order processing and information costs Transport costs Warehousing costs M a rk et in g L o g is ti c s
Marketing Channels
• Negotiations channel
– Buy and sell agreements are reached
• Financing channel
– Payments for goods
• Promotions channel
– Promoting a new or existing product
• Logistics channel
– Moving and storing product
Channel Intermediaries/
Facilitators
• Ownership channel
– Banks, public warehouses
• Negotiations channel
– Brokers
• Financing channel
– Banks, insurance companies
• Promotions channel
– Advertising agencies, public relations agencies
• Logistics channel
Main differences between marketing
channels and the supply chain
• Reengineering: While the marketing channel appears to concentrate on existing products, the supply chain includes more room for considering the reengineering of products and processes.
• With the supply chain concept, it is desirable to negotiate engineering and design changes in products to make them more compatible with the needs of other chain members.
• Inventory management:
• Inventories have shifted from push to pull systems.
• Push strategy:
– Manufacturers used long production runs to gain efficiencies of scale
– This minimizes unit costs and optimizing utilization of their production and distribution assets.
Although the push strategy can strengthen manufacturer’s profits, it also results in excess inventory and inefficient supply chain management
Push to pull systems…
• Under the pull scenario, the system listens to the customer through the retailer, transmits preferences back up the information pipeline and quickly responds with the merchandise demanded.
• The objective across the supply chain is to reduce the inventory buffer for all trading
Any strategy that comes to your
mind?
• A postponement strategy aims at delaying some supply chain activities until customer demand is revealed in order to maintain both low system wide cost and fast response.
• Logistics postponement
• Products in semi-finished forms and can be customized quickly in production facilities close to customers
SUPPLY CHAIN MANAGEMENT DEFINITION:
Supply chain management (SCM) refers to the
integration of both transportation and logistics into a seamless flow of physical goods, associated information and funds as goods move from raw materials sourcing to
Some more definitions…..
SCM creates value through each of its steps,
which take place across organizational boundaries as required by the market.
The supply chain includes all participants in the transportation and commercial transactions of
Some more definitions…..
• Supply chain management is
“the systemic, strategic coordination of the
traditional business functions and the tactics across these business functions within a particular company and across businesses in the supply chain, for the purposes of improving
the long-term performance of the individual companies and the supply chain as a whole.”
What is the difference?
• Supply chain management is a wider concept than logistics.
• Logistics is essentially a planning orientation and framework that seeks to create a single plan for the flow of product and information through a business.
• Supply chain management builds upon this framework and seeks to achieve linkage and coordination between the processes of other entities in the pipeline such as suppliers, customers and the organization itself.
Demand forecasting
Purchasing
Requirements planning
Production planning
Manufacturing inventory
Warehousing
Material handling
Packaging
Finished goods inventory
Distribution planning
Order processing
Transportation
Customer service
Strategic planning
Information services
Marketing/sales
Finance
Supply Chain
Management
Supply Chain
Management
Logistics
Purchasing/
Materials
Management
Physical
Distribution
Activity fragmentation to 1960
Activity Integration 1960 to 2000
2000+
Demand forecasting
Purchasing
Requirements planning
Production planning
Manufacturing inventory
Warehousing
Material handling
Packaging
Finished goods inventory
Distribution planning
Order processing
Transportation
Customer service
Strategic planning
Information services
Marketing/sales
Finance
Supply Chain
Management
Supply Chain
Management
Logistics
Purchasing/
Materials
Management
Physical
Distribution
Activity fragmentation to 1960
Activity Integration 1960 to 2000
2000+
How shipping affects international
logistics and supply chains?
1)During the first stage of supply chain evolution (fragmentation to physical distribution), international maritime industry restricted its activities to sea leg, concentrating on operating vessels, fleet scheduling and stowage planning (these were invisible to the shipper).
How shipping affects international
logistics and supply chains?
2)With the advent of the second stage (integrated logistics management), the shipping industry started offer through
transport services including the
development of intermodal transport.
3) The third stage of supply chain management has seen the shipping industry becoming more integrated into the shipper’s supply chain.
Supply Chain - Major Decisions
Location Decisions
Production Decisions
Inventory Decisions
Transportation Decisions
All 4 decisions mentioned above are interlinked and are critical to the success of a modern organization. To make a supply chain successful one needs to take all location, production, inventory & transportation decisions based on facts providing concrete trade off between cost & service levels.
Successful Supply Chains
have…
• an enterprise-to-enterprise point of view
• a systems approach across all
organizations in the supply chain
– Companies recognize interdependencies (coordination)
SUPPLY CHAIN ELEMENTS
• Supply Chain Design
• Resource Acquisition
• Long Term Planning (1 Year ++)
Strategic
• Production/ Distribution Planning
• Resource Allocation
• Medium Term Planning (Qtrly,Monthly)
Tactical
• Shipment Scheduling
• Resource Scheduling
• Short Term Planning (Weekly,Daily)
Globalization of Supply
Chains
• Increasing globalization
– Lower priced materials and labor – Global perspective of companies
– Development of global competition
• Extremely difficult to execute due to differences
– Cultural, economic, and technological – Political, spatial, and logistical
How long is the supply chain?
• For many firms, the supply chain extends from their suppliers’ suppliers to their customers’ customers and beyond.
• In the textile and apparel industry, a company like Levi’s may manage a supply chain consisting of:
• A fiber provider
• A yarn manufacturer • A textile manufacturer • A clothing design firm • A textile launderer • Distributors
• Retailers
• Firms supplying transportation, information or distribution services to any of Levi’s partners in the supply chain.
Supply Chain for
Milk Products
Supply chain:
structure and tiering
Supply chain can be fairly complex. The supply
chain for a car
manufacturer includes hundreds of suppliers, dozens of manufacturing plants (for parts) and
assembly plants (for cars), dealers, direct business customers, wholesalers, customers, and support functions such as product
engineering and purchasing.
Barriers to Supply Chain
Management
• Regulatory and political considerations
• Lack of top management commitment
• Reluctance to share, or use, relevant data
• Incompatible information systems • Incompatible corporate cultures