SCM Materials JPM - 2

8/7/2019 SCM Materials JPM - 2

http://slidepdf.com/reader/full/scm-materials-jpm-2 1/32

Push-Based versus Pull-Based Supply Chain ModelsPush-Based versus Pull-Based Sup

ply Chain Models



Maximizing Supply Chain SurplusMaximizing

Supply Chain SurplusProblem – 1Problem – 1

Manufacturer Distributor Retailer Customer

$1 $5 $10

Probable Customer demand per week of a perishable item are 1000,800, 600, 400 and 200 pcs., with a probability of 20% flat.

Retailer should select the Order Quantity to be placed to the Distributor from the optional Order sizes of 1000, 800, 600, 400 and 200 pcs/ week.

Recommend the best Retailer’s Order size for maximization of SUPPLY CHAIN SURPLUS.

Find also the Maximum probable Supply Chain Surplus.



Retailer Order (Pcs)

For Demand(Pcs)

Profit @ ($10 - $5) per pc and loss@ $5 per unsold pc

Proba-bility

Probableprofit ($)

1000 1000 1000 x 5 – 0 x 5 = $ 5000 0.2 1000

1000 800 800 x 5 – 200 x 5 = $ 3000 0.2 6001000 600 600 x 5 – 400 x 5 = $ 1000 0.2 200

1000 400 400 x 5 – 600 x 5 = - $ 1000 0.2 -200

1000 200 200 x 5 – 800 x 5 = - $ 3000 0.2 -600

TOTAL = $ 5,000 0.2 $1000


For Demand(Pcs)


Proba-bility

Probable profit($)

800 1000 800 x 5 – 0 x 5 = $ 4000 0.2 800

800 800 800 x 5 – 0 x 5 = $ 4000 0.2 800

800 600 600 x 5 – 200 x 5 = $ 2000 0.2 400

800 400 400 x 5 – 400 x 5 = $ 0 0.2 0

800 200 200 x 5 – 600 x 5 = - $ 2000 0.2 -400

TOTAL = $ 8,000 0.2 $1600




For Demand(Pcs)


Proba-bility

Probableprofit ($)

600 1000 600 x 5 – 0 x 5 = $ 3000 0.2 600

600 800 600 x 5 – 0 x 5 = $ 3000 0.2 600600 600 600 x 5 – 0 x 5 = $ 3000 0.2 600

600 400 400 x 5 – 200 x 5 = $ 1000 0.2 200

600 200 200 x 5 – 400 x 5 = - $ 1000 0.2 -200

TOTAL = $ 9000 0.2 $1800


For Demand(Pcs)


Proba-bility

Probableprofit ($)

400 1000 400 x 5 – 0 x 5 = $ 2000 0.2 400

400 800 400 x 5 – 0 x 5 = $ 2000 0.2 400400 600 400 x 5 – 0 x 5 = $ 2000 0.2 400

400 400 400 x 5 – 0 x 5 = $ 2000 0.2 400

400 200 200 x 5 – 200 x 5 = $ 0 0.2 0

TOTAL = $ 8000 0.2 $1600




For Demand(Pcs)

Profit @ ($10 - $5) per pc andloss @ $5 per unsold pc

Proba-bility

Probableprofit ($)

200 1000 200 x 5 – 0 x 5 = $ 1000 0.2 200

200 800 200 x 5 – 0 x 5 = $ 1000 0.2 200

200 600 200 x 5 – 0 x 5 = $ 1000 0.2 200

200 400 200 x 5 – 0 x 5 = $ 1000 0.2 200

200 200 200 x 5 – 0 x 5 = $ 1000 0.2 200

TOTAL = $ 5000 0.2 $1000

So, the best Retailer Order Quantitybest Retailer Order Quantity

(for maximum probable profit of $ 1800$ 1800 ) is600600

At Retailer Order of 600, Distributor’s Profit @ ($5 - $1 = $4 ) = 600 x $4 = $ 2400$ 2400

Supply Chain SurplusSuppl

y Chain Surplus = Retailer’s Profit + Distributor’s Profit

= $ 1800 + $ 2400 = $ 4,200$ 4,

200



Maximizing Supply Chain SurplusMaximizing

Supply Chain SurplusProblem – 2Problem – 2

Manufacturer Retailer Customer

$1 $10

Probable Customer demand per week of a perishable item are 1000,800, 600, 400 and 200 pcs., with a probability of 20%, 25%, 15%, 25% &15% respectively.

Retailer should select the Order Quantity to be placed to the Distributor from the optional Order sizes of 1000, 800, 600, 400 and 200 pcs/ week.

Recommend the best Retailer’s Order size for maximization of SUPPLY CHAIN SURPLUS.

Find also the Maximum probable Supply Chain Surplus.




For Demand(Pcs)

Profit @ ($10 - $1) per pc and loss @$1 per unsold pc

Proba-bility

Probableprofit ($)

1000 1000 1000 x 9 – 0 x 1 = $ 9000 0.20 1800

1000 800 800 x 9 – 200 x 1 = $ 7000 0.25 1750

1000 600 600 x 9 – 400 x 1 = $ 5000 0.15 750

1000 400 400 x 9 – 600 x 1 = $ 3000 0.25 750

1000 200 200 x 9 – 800 x 1 = $ 1000 0.15 150

TOTAL = $5200


For Demand(Pcs)


Proba-bility

Probable profit($)

800 1000 800 x 9 – 0 x 1 = $ 7200 0.20 1440

800 800 800 x 9– 0 x 1 = $ 7200 0.25 1800

800 600 600 x 9 – 200 x 1 = $ 5200 0.15 780

800 400 400 x 9 – 400 x 1 = $ 3200 0.25 800

800 200 200 x 9 – 600 x 1 = $1200 0.15 180

TOTAL = $5000




For Demand(Pcs)


Proba-bility

Probableprofit ($)

600 1000 600 x 9 – 0 x 1 = $ 5400 0.20 1080

600 800 600 x 9 – 0 x 1= $ 5400 0.25 1350600 600 600 x 9– 0 x 1 = $ 5400 0.15 810

600 400 400 x 9 – 200 x 1 = $ 3400 0.25 850

600 200 200 x 9 – 400 x 1 =- $1400 0.15 210

TOTAL = $4300


For Demand(Pcs)


Proba-bility

Probableprofit ($)

400 1000 400 x 9– 0 x 1 = $ 3600 0.20 720

400 800 400 x 9 – 0 x 1 = $ 3600 0.25 900400 600 400 x 9 – 0 x 1 = $ 3600 0.15 540

400 400 400 x 9 – 0 x 1 = $ 3600 0.25 900

400 200 200 x 9 – 200 x 1 = $1600 0.15 240

TOTAL = $3300




For Demand(Pcs)

Profit @ ($10 - $1) per pc andloss @ $1 per unsold pc

Proba-bility

Probableprofit ($)

200 1000 200 x 9 – 0 x 1 = $ 1800 0.20 360

200 800 200 x 9 – 0 x 1 = $ 1800 0.25 450

200 600 200 x 9 – 0 x 1 = $ 1800 0.15 270

200 400 200 x 9 – 0 x 1 = $ 1800 0.25 450

200 200 200 x 9 – 0 x 1 = $ 1800 0.15 270

TOTAL = $1800

The best Retailer Order Quantitybest Retailer Order Quantity (for maximum probable profit of $ 5,200$ 5,200 ) is 10001000

Since, there is no other member in distribution channel (retailer is directly purchasingfrom the manufacturer,

Total Profit across the distribution supply chain will be the Retailer’s profit.

Supply Chain SurplusSuppl y Chain Surplus = Retailer’s Profit

= $ 5,200$ 5, 200



FINANCIAL FEATURES for SCM PERFORMANCE MEASUREMENTFINANCIAL FEATURES for SCM PERFORMANCE MEASUREMENT

PROFITPROFIT ::Gross profitGross p rofit —earnings from an on-going business after direct costs of —earnings from an on-going business after direct costs of goods sold have been deducted from sales revenue for a given period.goods sold have been deducted from sales revenue for a given period.Net profitNet p rofit —earnings or income after subtracting miscellaneous income and—earnings or income after subtracting miscellaneous income and

expenses (patent royalties, interest, capital gains) and tax from operatingexpenses (patent royalties, interest, capital gains) and tax from operatingprofit.profit.Operating profitOp erating profit —earnings or income after all expenses (selling,—earnings or income after all expenses (selling,administrative, depreciation) have been deducted from gross profit.administrative, depreciation) have been deducted from gross profit.-- APICS Dictionary, 8th edition, 1995

Gross Profit = Total earning (Sales Revenue + Misc. Income ) – Direct Costs

Operating Profit = Total earning (Sales Revenue + Misc. Income ) – (DirectCosts + Selling expenses + Admin Expenses + Depreciation)

= Gross profit – (Selling expenses + Admin Expenses + Depreciation)

Net Profit = Sales Revenue - (Direct Costs + Selling expenses + Admin

Expenses + Depreciation +Misc. Expenses) = Operating Profit – (Misc. Expenses)

[Where, Misc. Expenses include Royalty on patent / Technology, Interest oncapital, capital gains]

Contribution = Sales Revenue – total variable Costs = Q (P – UVC)



Break-Even AnalysisBreak-Even Analy sis ::Fixed CostFixed Cost :: Expenses being incurred regardless of output volume/value.Expenses being incurred regardless of output volume/value.

e.g. office expenses, Administrative expenses, Overheade.g. office expenses, Administrative expenses, OverheadSalary, Lighting, AC, Heating, Security expenses, Interests,Salary, Lighting, AC, Heating, Security expenses, Interests,premiums, etc.premiums, etc.

Variable CostVariable Cost :: Expenses those varies directly with output volume/value.Expenses those varies directly with output volume/value.e.g. cost of materials, Power, Fuel, Maintenance, Lab, etce.g. cost of materials, Power, Fuel, Maintenance, Lab, etc

At Break-Even PointAt Break-Even Point ,, No Profit and No LossNo Profit and No Loss ..Total Profit = Total Revenue Income – (Fixed Cost + Variable Cost) = 0Total Profit = Total Revenue Income – (Fixed Cost + Variable Cost) = 0

i.e. Qi.e. Q BEBE x P - ( FC + Qx P - ( FC + Q BEBE x UVC) = 0x UVC) = 0

QQBEBE == FC .FC . P : Unit Sales PriceP : Unit Sales Price P - UVCP - UVC QQBEBE : Break-Even Quantity: Break-Even Quantity

SS BEBE : Break-Even Sales: Break-Even Sales

&& SS BEBE == FC x Total SalesFC x Total Sales FC : Total Fixed CostFC : Total Fixed CostTotal Sales – Total VCTotal Sales – Total VC UVC : Unit Variable CostUVC : Unit Variable Cost

[ S[ S BEBE = Q= Q BEBE x P =x P = FC x PFC x P == FC x P.FC x P. QQ .. == FC x Total Sales .FC x Total Sales .

P - UVC P.P - UVC P. QQ – UVC x – UVC x QQ Total Sales – Total VCTotal Sales – Total VC



Production Volume (Q)Production Volume (Q)

CostCost

TCTC==FC+VCFC+VC

Total RevenueTotal Revenue

FCFC

VCVC

QQBEBE

TCTC

TR= Q x PTR= Q x P

%BE = Q%BE = Q BEBE /Q x 100% /Q x 100%

Loss RegionLoss Region Profit RegionProfit Region

Break-even graphically Break-even g raphically

TC : Total CostTC : Total CostTR : Total RevenueTR : Total Revenue



Present valuePresent value —The value of future cash flows as on today. For example,the promise of $10 a year from now is worth something less than $10 in handtoday.

P = S / (1 + r) n

where, P = Present value, S = Future Revenue, r = Int. rate, n = periodNet present valueNet p resent value —The present value of all future earnings atdifferent time periods.Return on investmentReturn on investment (ROI)(ROI) ——A financial measure of the relative return from

an investment, usually expressed as a percentage of earnings produced by anasset to the amount invested in the asset.ROI = (Net Profit / Investment Capital) x 100%ROI = (Net Profit / Investment Capital) x 100%

ThroughputThroug hput – – the money generated by goods sold. In practice, throughput iscalculated as the net salesnet sales minusminus material costmaterial cost of the goods sold ..

Throughput = Sales Revenue - Material costs of goods soldThroughput = Sales Revenue - Material costs of goods soldEfficiencyEfficiency – – is a measure (as a percentage) of actual output with respect tois a measure (as a percentage) of actual output with respect tostandard output expected, over a given time of operation.standard output expected, over a given time of operation.ProductivityProductivity – is the measure of output relative to a specific input, e.g.,tons/labor hour. In other words Productivity is expressed as the Value of outputproduct with respect to the cost of Input resources, over a defined time.



BULLWHIPBULLWHIPPHENOMENONPHENOMENON

d d d fE d d d f i h l l f lh l l f

l



• Exaggerated demand forecastingExaggerated demand forecasting at each level of supplyat each level of sup plychain distribution channelchain distribution channel , mainly due to communicationdue to communicationgapgap among the members of the distribution channel, is calledBullwhip effectBullwhip effect .

• The bullwhip effect bullwhip effect is the phenomenon of orders andorders andinventoriesinventories gettinggetting progressively larger progressively larger (more variable) movingmoving backwards through the supply chainbackwards throug h the supply chain . This is illustratedgraphically on the next slides.

• The reasons behindThe reasons behind Increase inIncrease in demand variabilitydemand variability as we

move upstream in the distribution channel, from the markettowards manufacturer ::i) Lack of communication and coordinationLack of communication and coordination among themembers of distribution channel, along the distribution networkpath from the consumer back to the manufacturer

ii) Delays in information and material flowsDelay s in information and material flowsiii) Shortage gamingShortag e gaming – tendency of asking for more quantitythan what is needed, for achieving safety against stock-out.iv) Error in Demand ForecastingError in Demand Forecasting at different stages of distribution channel.



The Bullwhip Effect



Supply Chain Management and UncertaintySup ply Chain Management and Uncertainty• Inventory and back-order levels fluctuate considerably across the supply

chain even when customer demand doesn’t varyeven when customer demand doesn’t vary• The variability worsens as we travel “up” the supply chain• Forecasting doesn’t help!

ManufacturerWholesale

Distributors ConsumersMulti-tierSuppliers Retailers

Time

S a

l e s

S a

l e s

Time

S a

l e s

Time

S a

l e s

Time

Bullwhip EffectBullwhip Effect



SCM - Inventory Management Issues

OrderSize

Time

Source: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998

Customer Customer DemandDemand

Retailer OrdersRetailer OrdersDistributor OrdersDistributor Orders

Production PlanProduction Plan

MeanDemandLine



CAUSES OF DEMAND VARIABILITYCAUSES OF DEMAND VARIABILITY that leads to thethat leads to theBULLWHIP effect BULLWHIP effect includes:includes:

1)1) Demand forecastingDemand forecasting : Many firms use the min-max inventory policy . This means that when the inventory level falls onto thereorder point an order is placed to bring the level back to themax , or the order-up-to-level .As more data are observed, estimates of the MEANMEAN and

STANDARD DEVIATIONSTANDARD DEVIATION of customer demand are updated.This leads to changeschanges (increase) in the(increase) in the SAFETY STOCKSAFETY STOCK ,, order quantities are increased and thereby Average InventoryLevel increases causing more variability of demand.

2)2) Longer Lead TimeLong er Lead Time : As lead time increases, safety stocks aresafety stocks areincreasedincreased , and ORDER QUANTITIES are increased causingmore demand variability.



CAUSES OF DEMAND VARIABILITYCAUSES OF DEMAND VARIABILITY to theto the BULLWHIP effect BULLWHIP effect

3)3) Batch OrderingBatch Ordering : Many firms use batch ordering such as with amin-max inventory policy. Their suppliers often face a largelarg eorder order followed by periods of followed by periods of no ordersno orders , again followed by, again followed byanother large order, so onanother large order, so on . This pattern is repeated such thatsuppliers see a highly variable demand (order) pattern.

4)4) Price FluctuationPrice Fluctuation :: If prices to retailers fluctuate, then they maymay try to stock uptry to stock up when prices are lower, leading to demand

variability.

5)5) Inflated OrdersInflated Orders :: When retailers envisage that a product maybe in short supply , they will tend to inflate orderstend to inflate orders to insure thatthey will have ample supply to meet customer demand. Whenthe such period comes to an end, the retailer goes back to theretailer goes back to thesmaller orderssmaller orders , thus causing more variability.

6)6) Lack of Centralized InformationLack of Centralized Information



How can we tackle with theHow can we tackle with the bullwhip effect bullwhip effect ??1)1) Reducing demand variabilityReducing demand variability2)2) Centralizing information of demandCentralizing information of demand canreduce the uncertainty . It can be possible when theinformation of customer-demand is available to allinformation of customer-demand is available to allmembers of the distribution channelmembers of the distribution channel of the supply chain.- This information can be used to better predict what productvolumes are needed and when they are needed, such thatmanufacturers can better plan for production accordingly.- However, even though centralizing demand information canreduce the bullwhip effect , but it will not eliminate it.3)3) Reducing lead timeReducing lead time :: Ordering times can be

reduced by using EDI (electronic data interchange) causingreduction of Lead Time.

4)4) UsingUsing CPFRCPFR ((Collaborative Planning,Collaborative Planning ,Forecasting & ReplenishmentForecasting & Replenishment ) Technique) Technique :: It isthe Strategic partnership technique to avoid exaggerated

demand figure in distribution chain caused due to lack of communication and coordination.



5)5) Strategic partnershipsStrateg ic partnerships :: The use of strategicpartnerships can improve the sharing of information and

coordination in inventory management within the supplychain. Example : by adopting VMI (Vendor Managedby adopting VMI (Vendor ManagedInventory)Inventory) which is a strategica strategic partnership drivepartnership drive withwithSuppliers.Suppliers.

6)6)

Reducing uncertaintyReducing uncertainty

byby

– Accurate ForecastingAccurate Forecasting – Effective CollaborationEffective Collaboration – Extensive IntegrationExtensive Integration

– Intensive CommunicationIntensive Communication7)7) Risk PoolingRisk Pooling (Centralizing the inventory)(Centralizing the inventory)



Collaborative PlanningCollaborative PlanningMany major retailers and large manufacturers canMany major retailers and large manufacturers can reduce their reduce their Operating costsOp erating costs through the efficient use of supply chainthrough the efficient use of supply chain

management techniques.management techniques.But, in many cases there has been little effect on the price of the itemBut, in many cases there has been little effect on the price of the itemto the consumer.to the consumer.Some argue that this occurred because theSome argue that this occurred because the total amount of inventorytotal amount of inventory in the supply chainin the supply chain was not reducedwas not reduced . Instead, the inventory may have. Instead, the inventory may havebeen transferred to the second and third tier suppliers, but notbeen transferred to the second and third tier suppliers, but noteliminated from the supply chain, leading to increase in totaleliminated from the supply chain, leading to increase in totalinventory.inventory.COLLABORATIVE PLANNINGCOLLABORATIVE PLANNING requires the firm to work withrequires the firm to work with closeclose

communication, coordination and integrationcommunication, coordination and integration withwith customers &customers &Distributor Channel members as well as suppliersDistributor Channel members as well as suppliers to ensure that everyto ensure that everydayday all of them have production and Delivery schedulesall of them have p roduction and Delivery schedules that agreethat agreewith the needs of the customer.with the needs of the customer.This has to be doneThis has to be done routinelyroutinely and not when the supply chain or aand not when the supply chain or amember is in a crisis.member is in a crisis.

C ll b ti Pl i



Collaborative Planning

Some firms are usingSome firms are using Advanced Planning and SchedulingAdvanced Planning and Scheduling ((APSAPS ))Software to aid their collaborative communication.to aid their collaborative communication.

In COLLABORATIVE PLANNING a set of methods are developedIn COLLABORATIVE PLANNING a set of methods are developed

by which theby which the supply chain partnerssup ply chain partners could havecould have(i)(i) joint sales forecasts joint sales forecasts and/or and/or (ii)(ii) joint production plans joint production plans ,,such that a revision by one partner would be immediately transmittedsuch that a revision by one partner would be immediately transmittedto the next / other partners.to the next / other partners.

For theFor the APSAPS to be effective for to be effective for Collaborative Forecasting andCollaborative Forecasting andPlanningPlanning throughout the supply chain, it is necessary that athroughout the supply chain, it is necessary that a reliablereliablemethod for Passing informationmethod for Passing information between the differentbetween the different APSAPS systems besystems bein use. When a supplier has only one or two major customers, it isin use. When a supplier has only one or two major customers, it is

possible for them topossible for them to have the same type of softwarehave the same typ e of software as their as their customers are using . When a supplier has many customers, theycustomers are using . When a supplier has many customers, theycannot have the same softwarecannot have the same software that matches each of their customer’sthat matches each of their customer’sneeds. They can useneeds. They can use CPFRCPFR ((Collaborative Planning, Forecasting &Collaborative Planning , Forecasting &ReplenishmentRep lenishment )) Technique.Technique.

I d E f S l Ch i MI d E f S

l Ch i M



Intranets and Extranets for Supply Chain ManagementIntranets and Extranets for Sup ply Chain Management

: Intranet:Extranet



LOGISTICSLOGISTICS



What is LOGISTICSWhat is LOGISTICS ??

►► LogisticsLog istics is theis the well-coordinatedwell-coordinated ,, effectiveeffective andand efficientefficient material-material-

flow systemflow sy stem having thehaving the objectiveobjective of of availability of availability of rightrigh t materialsmaterials / /items /items / productsproducts of of right quantityrig ht quantity atat right timerigh t time atat right costrigh t cost , and also, and alsoCustomer-servicesCustomer-services atat right timerigh t time atat right costrigh t cost ,,

at theat the right points of requirementrigh t points of requirement (processing units / end users /(processing units / end users /customers).customers).

►► LOGISTICSLOGISTICS is one of the importantis one of the important businessbusiness FUNCTIONFUNCTION as well asas well as TOOLTOOL for for developingdevelopi ng & improvement& impr ovement businessbusiness competitivenesscompe titiveness .. Better the Logistics, better the competitivenessBetter the Logi stics, better the competitiveness of the organizationof the orga nization

in the marketin the market ..

►► Logistics ManagementLog istics Management is anis an integrated processintegr ated process of of

planning, implementing and controllingplanning, implementing and controlling of efficient & cost-effectiveof efficient & cost-effectivephysical flow (movementphysical flow (movement ) and) and storagestorage of of (i) Materials (raw-materials, WIP, etc),(i) Materials (raw-materials, WIP, etc),(ii) Finished products, (iii) Related information,(ii) Finished products, (iii) Related information,

from the point of origin to the point of usefrom the po int of origin to the point of use as per customer’sas per customer’srequirement.requirement.



►►ACTIVITY ELEMENTS of LOGISTICSACTIVITY ELEMENTS of LOGISTICS ::1.1. ModesModes of of Transport Transp ort.2.2. Equipment & System (Network)Eq uipment & System (Network) of of TransportationTransp ortation ..

3.3. Material HandlingMaterial Handling4.4. Storage FacilitiesStorag e Facilities (Inventory)(Inventory) – should be Effective &Effective &

EfficientEfficient ..5.5. Distributing ChannelDistributing Channel6.6. ConnectivityConnectivity ie Flow of materials and all information,ie Flow of materials and all information,

from the Point of Origin to the Point of Use (Customers).from the Point of Origin to the Point of Use (Customers).7.7. InformationInformation Processing Processing (collecting, storing, arranging (collecting, storing, arranging

and retrieving of all Information related to Logistics).and retrieving of all Information related to Logistics).8.8. Speed Sp eed && Reliability Reliability in Flow Flow of of MaterialsMaterials and relatedand related

InformationInformation of Logistics.of Logistics.



►► Today LOGISTICS isToday LOGISTICS is widely usedwidely used ,, virtually invirtually inevery sphereevery sphere of lifeof life and almost in every areaand almost in every area

from domestic kitchen to industries andfrom domestic kitchen to industries andmarkets.markets. Few of the very common eFew of the very common e xamplesxamp les ::1.1. Laundry ServiceLaundry Service in Five Star Hotelin Five Star Hotel

2.2. 24-Hour ATM24-Hour ATM in retail finance drive (Banking)in retail finance drive (Banking)3.3. DabbawalasDabbawalas (food supply) in Mumbai for (food supply) in Mumbai for

working personnelworking personnel4.4. IndianIndian Postal ServicePostal Service5.5. Public Distribution SystemPublic Distribution Sy stem like Rationinglike Rationing

system under system under Food Corporation of IndiaFood Corp oration of India (FCI)(FCI)6.6. Collection, processing & distribution of milkCollection, processing & distribution of milk

products.products.

What isWhat is LOGISTICS MIXLOGISTICS MIX ??



What isWhat is LOGISTICS MIXLOGISTICS MIX ?? It is theIt is the functional areasfunctional areas covered by the LOGISTICScovered by the LOGISTICS

(process of movement of materials & information across(process of movement of materials & information acrossthe Supply Chain).the Supply Chain).

LOGISTICS MIX includesLOGISTICS MIX includes ::1.1. Order ProcessingOrder Processing

i) Order Registration,i) Order Registration,ii) Order Assessing and Estimating,ii) Order Assessing and Estimating,

iii) Order Processing (including Production withiii) Order Processing (including Production withQuality Control),Quality Control),iv) Coordination and Monitoring of Execution of Order.iv) Coordination and Monitoring of Execution of Order.

2.2. Inventory ManagementInventory Management

i) Material Requirement Planning,i) Material Requirement Planning,ii) Inventory-Level Decision,ii) Inventory-Level Decision,iii) Inventory Control.iii) Inventory Control.

3.3. Material HandlingMaterial Handling

4 Transportation4 Transportation LOGISTICS MIX (contd)



4. Transportation4. Transportation LOGISTICS MIX (contd)

i) Rout Planning,i) Rout Planning,ii) Transport-Mode Selection,ii) Transport-Mode Selection,

iii) Vehicular Scheduling,iii) Vehicular Scheduling,

iv) Communication.iv) Communication.5.5. WarehousingWarehousingi) Material Storage,i) Material Storage,ii) Warehouse/Stores site selection and Network Planning,ii) Warehouse/Stores site selection and Network Planning,

iii) Preparing /Feeding for the Orders,iii) Preparing /Feeding for the Orders,

iv) Despatch Documentation.iv) Despatch Documentation.6.6. PackagingPackag ing

Damage, Spillage & Spoilage Prevention duringDamage, Spillage & Spoilage Prevention duringi) Material handling,i) Material handling,

ii) Single Transportation,ii) Single Transportation,

iii) Inter-modal Transportation,iii) Inter-modal Transportation,iv) Storage.iv) Storage.

7.7. Communication SystemCommunication Sy stem - Smooth, prompt, correct and effective.- Smooth, prompt, correct and effective.8.8. Information FlowInformation Flow ((Logistics is basically an Information basedLogistics is basically an Information based

activity).activity).

◙ COMPARISON bCOMPARISON b



◙◙ COMPARISON betweenCOMPARISON betweenLogisticsLog istics && Supply-ChainSup ply-Chain

SUPPLY-CHAINSUPPLY-CHAIN LOGISTICSLOGISTICS1.1. Mental & EmotionalMental & Emotional BondingBonding ♦♦ PhysicalPhy sical BondingBonding

2.2. CreatesCreates Opportunity &Opportunity & ♦♦ AppliesApp lies to Opportunity for to Opportunity for Competitiveness Success /CompetitivenessCompetitiveness Success /Competitiveness

3.3. EnsuresEnsures COMPETITIVENESSCOMPETITIVENESS ♦♦ EnsuresEnsures Cost EFFECTIVENESSCost EFFECTIVENESS

4.4. CREATESCREATES the Marketthe Market ♦♦ SATISFIESSATISFIES the Marketthe Market

5.5. EnsuresEnsures QualityQuality atat ♦♦ EnsuresEnsures QualityQuality atat

PRODUCTIONPRODUCTION LevelLevel CUSTOMERCUSTOMER LevelLevel6.6. AllowsAllows Free Flow of materials,Free Flow of materials, ♦♦ MakesMakes Free Flow of materials,Free Flow of materials, information & Money information & Moneyinformation & Money information & Money

7.7. Leads to IntegrationLeads to Integr ation of Flows.of Flows. ♦♦ MeansMeans thethe Flow Within &Flow Within &

BetweenBetween

Date post:	09-Apr-2018
Category:	Documents
Upload:	goverthanan33
View:	217 times
Download:	0 times

SCM Materials JPM - 2

Documents