• Risk Management, calculation, Zoning and treatments
• Vertical + horizontal and Virtual integration
• Case study Sony Ericsion
• Transportation n Mode of transportation
Importance of SCM n Logistics
Difference between LM and SCM
G - GETBSU (See Yourself)
Delivering a Burger to You
● When you buy a burger from McDonald or a Zinger from KFC,
have you thought where all of the ingredients came from that
produced your burger?
● Depending on the restaurant’s location, McDonald’s and KFC
source their ingredients from both local and global suppliers.
● The challenge is to ensure that all restaurants in their network
have enough ingredients to meet customer demand.
● This requires planning, implementing, and controlling the
efficient, effective flow and storage of goods and services to
deliver the burger to you
Fighting a War is not easy
planning and carrying out the movement and
maintenance of forces....
those aspects of military operations that deal with the
design and development, acquisition, storage,
movement, distribution, maintenance, evacuation and
disposition of material; movement, evacuation, and
hospitalization of personnel; acquisition of
construction, maintenance, operation and disposition
a gigantic task indeed.
● The word logistics was first associated with the
military in 1905 as a branch of war that pertains to the
movement and the supply for armies.
● Now, Logistics is not only used in military but also by
managers in almost all spheres of activity to fine tune
the process of delivery through various supply lines
with the primary objective of being able to deliver not
just 'in time‘ but also at 'the desired place'.
Definition of Logistics
● Logistics - ...the process of planning, implementing,
and controlling the efficient, effective flow and storage
of goods, services, and related information from point
of origin to point of consumption for the purpose of
conforming to customer requirements."
– (Reference: Council of Logistics Management)
(Note that this definition includes inbound, outbound,
internal, and external movements, and return of
THE PURPOSE OF A
● RIGHT QUANTITIES of the
● RIGHT GOODS to the
● RIGHT PLACES at the
● RIGHT TIME in the
● RIGHT CONDITION at the
● RIGHT COST.
Creating a logistics strategy Creating a logistics
strategy is a balancing act which takes many variables
Supply Chain Management
● The network of organizations that fulfill
– Can either be product or service oriented
● Product: cars, computers, etc.
● Service: MBA students, Hospitals
● By definition, incorporates multiple firms or
organizations not under central control
Some More Definitions
● Supply Chain Management is primarily concerned with the
efficient integration of suppliers, factories, warehouses and stores
so that merchandise is produced and distributed in the right
quantities, to the right locations and at the right time, and so as to
minimize total system cost subject to satisfying service
● Call it distribution or logistics or supply chain management. By
whatever name, it is the graceful, gritty, and bulky process by
which companies move, materials, parts, and products to
customers. Fortune (1994)
Philosophy of SCM
● The entire supply chain is a single, integrated
● The cost, quality and delivery requirements
of the customer are objectives shared by
every company in the chain.
● Inventory is the last resort for resolving
supply and demand imbalances.
Why is SCM Important?
● Strategic Advantage – It Can Drive Strategy
* Manufacturing is becoming more efficient
* SCM offers opportunity for differentiation (Dell) or
cost reduction (Wal-Mart or Big Bazaar)
● Globalization – It Covers The World
* Requires greater coordination of production and
* Increased risk of supply chain interruption
* Increases need for robust and flexible supply
Why is SCM Important?
● At the company level, supply chain management
– For many products, 20% to 40% of total product
costs are controllable logistics costs.
– For many products, performance factors such as
inventory availability and speed of delivery are critical
to customer satisfaction.
SCM and Marketing
● Due to increased competition and product
improvements power of brand value is declining.
● Technological difference between company product is
● Availability at the point of sales is important to retain
even an old satisfied customer, otherwise the sale will
be lost to competitor
● Customer service is a major ‘value advantage’.
Barriers to SC Integration
● Organization Structure
● Measurement Systems
● Inventory Ownership
● Information Technology
● Knowledge Transfer Capability