Supply Chain Management
&
Logistics Management
Mr. EzzElarab M.Elawoor
University of Palestine
1
The flows of apparel and fashion accessory products,
services, information, and finances
2
The Emergence of Supply Chain Concept
• ________________________________________
– Customer base is not limited to a domestic market but
expanded to the global market.
– Growing number of global competitors
– “Everyday low prices” policy and its impact on cost
cutting.
– Demanding retailers leveraging more consumer
information and supplier choices.
• Deregulation means increased competition
• Technology
– Unlimited access to information
– Tools to improve efficiency and effectiveness
3
Supply Chain as a Competitive Leverage
• Improve the organization’s efficiency to compete in
the global market
• M&As, alliances, … and managed supply chains
• Supply Chain is an vital and independent concept.
© 2003, Coyle, Bardi, and Langley.
4
A supply chain is
a set of three or more firms directly linked by one or
more of the chain and insure the flows of products,
services, information, from a point of origin to a point
of consumption.
© 1999, Min et al.
5
A basic supply chain is
a firm, an immediate supplier, and an immediate
customer directly linked by one or more of the
upstream and downstream flows of products,
services,finances, and information.
© 1999, Min et al.
6
DIRECT SUPPLY CHAIN
SUPPLIER
Sewing shops in
Hong Kong
FIRM
Tommy Hilfiger
in Hong Kong
© 1999, Min et al.
CUSTOMER
May Department Stores
in St. Louis
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An extended supply chain includes
suppliers of the immediate supplier and customers of
the immediate customer, all linked by one or more of
the upstream and downstream flows of products,
services, finances, and information.
© 1999, Min et al.
8
EXTENDED SUPPLY CHAIN
SUPPLIER’S
SUPPLIER
Yarn
suppliers in
Korea
SUPPLIER
Sewing shops in
Hong Kong
FIRM
Tommy Hilfiger
in Hong Kong
CUSTOMER
May Department
Stores
in St. Louis
© 1999, Min et al.
CUSTOMER’S
CUSTOMER
Lord & Taylor
in New York
9
An ultimate supply chain includes
all the firms involved in all the upstream and
downstream flows of products, services, finances, and
information from the ultimate supplier to the ultimate
customer.
© 1999, Min et al.
10
ULTIMATE SUPPLY CHAIN
ULTIMATE
SUPPLIER
SUPPLIER
FINANCIAL
PROVIDER
MARKET
RESEARCH FIRM
FIRM
Tommy Hilfiger
CUSTOMER
THIRD PARTY
LOGISTICS SUPPLIER
ULTIMATE
CUSTOMER
© 1999, Min et al.
11
Cooperative relationships between two companies are
distinguished from supply chains, since this type of
relationship does not involve any one company in
simultaneous upstream and downstream relationships.
© 1999, Min et al.
12
Channel Partnership
SELLER
BUYER
© 1999, Min et al.
13
There is a definite demarcation
between
supply chains as phenomena that exist in business
and
the management of those supply chains.
© 1999, Min et al.
14
Definitions of supply chain management fall into two
categories:
Supply Chain Management as
a management philosophy
and
Supply Chain Management as
a set of activities to implement a management
philosophy both within a firm and across the firms.
© 1999, Min et al.
15
The Supply Chain Philosophy
• A business philosophy that guides firms to
manage the flows from supplier to ultimate user in
a synchronized way
• The characteristics of SCM Philosophy:
- to viewing the channel as a whole, and to managing the
total flow of goods inventory from the supplier to the
ultimate customer,
- to synchronize and converge intrafirm and interfirm
operational and strategic capabilities into a unified
whole,
– A unique concept to create unique and individualized
sources of customer _______, leading to customer
satisfaction.
16
A Supply Chain Orientation is
the implementation by SCM of the systemic, strategic
implications of the tactical activities and processes
involved in managing the various flows in a supply
chain.
© 1999, Min et al.
17
Supply Chain Management is
the implementation of a supply chain orientation
across the whole process.
© 1999, Min et al.
18
Supply Chain Management is
the systemic, strategic implementation of the
traditional business functions, the tactics, and the
processes across these business functions within a
particular company and across companies within the
supply chain, for the purposes of improving the longterm performance of the involve companies and the
business as a whole.
© 1999, Min et al.
19
SUPPLY CHAIN MANAGEMENT OVERVIEW
Supply Chain
Management
Consequences
Supply Chain
Orientation
Willingness to address:
Supply Chain
Philosophy
• Differential
Advantage
• Lower Costs
• Improved
Customer Value
and Satisfaction
© 1999, Min et al.
20
Logistics in Supply Chain
Management
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Logistics in a Supply Chain Across Firms
“Logistics is _____________________________
that plans, implements, and controls the efficient
____ and _____ of goods, ______, and __________
from the point of _____ to the point of __________
in order to meet customers’ requirements.” (Council
of Logistics Management 1998)
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A View of Business Logistics in a Firm
© 2003, Coyle, Bardi, and Langley.
23
Logistics Management in a Firm’s Generic
Value Chain
Source: Michael E. Porter (1985), Competitive Advantage, p. 46
24
Traditional Logistics Management
Adapted from Langley and Rutner
25
An Example of Traditional Approach:
Team Hanes
(Licensed Sports Apparel)
Production Orders
Raw
Material
Inventory
Retailer Case Orders
Production Manufacturer
DC
Inventory
DC
Replenishment
Retailer
DC
Inventory
Store Item Orders
Store
Replenishment
Product Flows
Adapted from Langley and Rutner
In-Store
Model
Stocks
Consumer
Demand
Information Flows
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Emergence of Integrated Logistics Concept
within a Firm
© 2003, Coyle, Bardi, and Langley.
27
Integrated Logistics Concept in a Supply
Chain
© 2003, Coyle, Bardi, and Langley.
28
The Role of Logistics in SCM
• ______________________
– Visibility
– Pull systems
• ________________________
– levels must be tailored to each customer
– not all customers require the same service
• __________________________
– Coordination of supply chain activities may lower the
landed cost.
• ____________________________
– Real-time two way information flows
– Collaborative planning, implementation, and control of
logistics activities in a supply chain
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An example of Supply Chain Approach:
Team Hanes
Blank
Garment
Inventory
Production
Consumer
Team Hanes Store Replenishment In-Store Demand
DC
Model
Inventory
Stocks
Product Flows
Information Flows
Adapted from Langley and Rutner
30
Average Throughput Time of Dry Grocery
Chain before and after ECR Implementation
© 2003, Coyle, Bardi, and Langley.
31
Inventory Turns & Running Lean
Number of times Dell and Compaq turn inventory over in
each quarter, calculated at an annual rate.
50
45
40
35
30
25
20
15
10
5
0
Compaq
Dell
1996
Qtr 4
1997
Qtr 1
1997
Qtr 2
1997
Qtr 3
1997
Qtr 4
© 2003, Coyle, Bardi, and Langley.
32
Total Supply Chain Management Cost
(All Sectors)
14
Revenue %
12
10
8
Best-in-class
Median
6
4
2
0
1996
1997
© 2003, Coyle, Bardi, and Langley.
33
Remember SCM concepts are Beyond
Logistics Management
• Dell Computer's direct relationships with its customers
create valuable information that, in turn, allows it to
coordinate its entire value chain back through
manufacturing to product design (with other firms).
• Wal-Mart, with its customer information and logistics
capabilities, functions as a supply chain leader in its supply
chain with manufacturers such as Procter & Gamble and
the end users.
• Adidas brand is associated with high ideals such as
commitment and honesty, and Adidas makes sure these
ideal words apply to its supply chain members.
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… and also remember Logistics
Management has been evolving
FROM
TO
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Chapter Summary and Review Questions
So, what is supply chain philosophy?
And SCO and SCM?
Why supply chain-related concepts are gaining
popularity today?
What is logistics?
What is the relationship between logistics and
supply chain management?
36
Discussion
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