Logistics and Supply Chain Management 1A

LSCM5121

Prescribed textbook : Fundamental Principles pf Supply Chain

Management. Samson Mbanje & Johanna Lunga

Presentation by
Ms. T. Sirenya
Email: tsirenya@iie.ac.za
 Notices:
• Module pacer – Accessible on RC Learn
• Consultations - Weekly- book appointment via email:
tsirenya@iie.ac.za
• Integrated Curriculum Engagement (ICE) Activities – At the end of
every Chapter – 10%
• Assessment Dates:
• Test 30% - 29 April 2024
• Assessment 25% - 15 May 2024
• Examination 35% - 24 June 2024
Note: LU for each assessment are disclosed in the module pacer
 MO1 – Demonstrate knowledge and understanding of the
key logistics concepts

MO2 – Reflect on the relationship between the concept

of SCM and LM

Module
Outcomes MO3 – Demonstrate knowledge and understanding of the
concepts, principles and practices of logistics and SCM

(MO’s)
MO4 – Analyse the product life cycle in an organisation

MO5 – Apply the principles of logistics and SCM

 LO3 – Explain the
LO2 – Draw and
LO1 – Define a Supply concept of Supply
Describe the diagram
Chain (SC) Chain Management
of the generic SC
(SCM)

LO4 – Explain the LO5 – Discuss the LO6 – Describe the

Learning components of SCM elements of SCM current trends in SCM

Outcomes:
LO’s LO7 – Understand the
benefits of SCM
LO8 – Describe the SC
performance drivers
LO9 – Explain the
concept of SC network
design

LO10 – Discuss
Logistics Management
(LM)and its
components
 Theme 1: SCM Concept

• 1.1 : Introduction
• 1.2: The Supply Chain concept
• 1.3: Types of Supply Chain
• 1.4: Supply Chain Management
• 1.5: Elements of SCM
• 1.6: Some Current Trends in SCM
• 1.7: Benefits of a SCM Approach
• 1.8: SC Network Design Decision
• 1.9: Supply Chain Performance Drivers
 Key Terms and Concepts

DYNAMIC BUSINESS SUPPLY CHAIN SUPPLY CHAIN LOGISTICS

ENVIRONMENT MANAGEMENT MANAGEMENT
 1.1 Introduction to Supply Chain Management-
Overview

Supply chain
 Refers to the network of all the individuals, organisations, resources, activities and technology involved in the
creation and sale of a product.
 The core objective of any organisation’s supply chains involves maximising the overall generated value.
 SC are dynamic and involve stakeholders that work towards, either directly or indirectly, the fulfilment of customer
satisfaction/demand.
What Is Supply Chain Management (SCM)
 It is the management of the flow of goods and services and includes all processes that transform raw materials into
finished products.
 It involves the active streamlining of a business's supply-side activities to maximize customer value and gain a
competitive advantage in the marketplace.
 1.2. THE SC Concept

• SCM is based on the idea that nearly every product that comes to market results from the efforts of various
organizations that make up a supply chain.
• Although supply chains have existed for ages, most companies have only recently paid attention to them as a
value-adding activity to their operations.
• The parties involved in the SC include Manufactures, suppliers, transporters, warehouses, retailers and
customers.
• SCM encompasses the planning & management of all activities involved in sourcing, procurement, conversion as
well as logistics management (CSCMP)
• While, supply chain encompasses everything from the delivery of raw materials from the supplier to the
manufacturer through to its eventual delivery to the end user.

To better understand SCM visit link at your own time.

• https://www.youtube.com/watch?v=lZPO5RclZEo
Figure 1.1 GENERIC SUPPLY CHAIN FOR
Lewis Furniture
Lewis
 Supply Chain Concept – Key Success Factors

• Involvement of all parties, effective communication

• Adaptation to constant shifts in the market
o Technology shifts
o Customer shifts
• Bullwhip effect – one recurring problem within SCM.
o Distorted (mispresented) demand information due to various stakeholders.
• Excess stock holding across the supply chain
o Efficient & Effective information sharing relating to inventory levels, schedules,
forecasts, and shipments by SC members. Thus,
o Other SC members will be able to adjust sourcing, manufacturing & distribution
decisions.
 1. Service chains  Industries that implement
statements associated with the delivery of the
organisational services. e.g. banks, insurance

2. Concentrated chains  Industry with few

customers, many suppliers who uses Electronic data
interchange (EDI) systems and Just-in-time (JIT)
strategy. E.g. Automotive Industry
1.3 Types of
Supply Chain 3. Retail and Distribution chains  Exist in a market
with many customers, few sellers who adopts vender-
managed inventory (VMI) software- such as
supermarkets

4. Batch manufacturer chains  many customers,

many suppliers. i.e. BB and Albany Bakers.
 Planning – Strategic part of SCM. Metrics are developed
to monitor the SC so it remains efficient & effective

Sourcing – selection of suppliers needed by the firm.

1.4 Supply Supply managers set pricing, delivery and payment

processes.

Chain
Management Making – manufacturing step. Scheduling production
activities, testing, packaging & preparations for delivery.

components
Delivering – Firm coordinates receipt of orders, select
carriers and set up an invoicing system to receive
payments.

Returning – SC planners create a flexible & responsive SC

for returning of defective products.
1.5. Supply Chain Elements
1. Purchasing – Buying of raw
material, bidding/short-term
contracts

2. Operations-
4. Integration raw materials
– Measuring into final
success of good. Semi
SCM, finished –are
Mitigating assembled.
risks/problems Quality is
checked

3. Distribution- Deliveries
through modes of transport
1.6. SCM - Current Trends
Current Trends in SCM
• Reducing supply chain cost
• Improved supply chain responsiveness
• The greening of the supply chain
• More emphasis on visibility
• Expanding the supply chain (breadth, depth)
 Quality (product, service)

Communication and collaboration

Cost reduction (waste management)

1.7. Benefits of
a SCM approach Product development and delivery-agile supply

Just-in-time supply (demand planning, forecasting)

Complementary resources and capabilities

Responsiveness to customer requirements

1.8. Supply Chain Network
Design Decision
• Strategic SC planning
• Process for planning and modelling the SC to better understand the
costs and time to bring goods & services to the market with the
available resources of a company.
• Focuses on planning, implementation & control of SC operations.
• SCND is based on the following decisions:
o Location of manufacturing plants, product per plant
o Number of warehouse facilities
o Customer or market areas to service
o Product lines to be stocked
o The role of distribution centres
o Sourcing channels
o Service providers and value-added services
o Transport mode and carrier
 1.9. Supply Chain Performance Drivers
• To better understand how to improve SC performance in terms of responsiveness & efficiency, it is
necessary to examine the following:
• Facilities: physical location in the SC network where product is stored &assembled. Size, number
& where to locate these facilities remains a concern for SC managers.
• Inventory: Consist of raw materials, work-in-progress, maintenance/repair/operating supplies
(MRO), Finished Goods, goods in transit.
• Information: It is a key driver that glues other SC drivers allowing them to work together
smoothly.
• Sourcing: the ability of the firm to select strategic suppliers and partners influences the firms’
competitive success.
• Pricing: Price is what the seller charges for a package of benefits offered to the buyer. Change in
price will always impact the other SC drivers & revenues of the firm.
• Transport: It is a link between customers, suppliers, factories, warehouses & other SC
stakeholders. Transportation has a larger impact on the SC responsiveness & efficiency.
 Figure 1.2: SCM Key Functions
Manufacturing/
Product/ Service
New flow management
Customer service
product/service
and order
development
fulfillment
(R&D)

Logistics
• Materials management
• Warehousing Client relationship
• Transportation management
• Distribution

Procurement
• Purchasing
• Strategic sourcing Supply Chain Supply chain
• Supplier development
• Supplier relationship Management strategy
management

Source: Mbanje & Lunga

1.10.1 PORTER’S VALUE CHAIN: PRIMARY
ACTIVITIES
• Porters value chain consist of primary & secondary support activities that can lead to competitive
advantage when configured correctly.

The Primary activities of the

value chain consist of the
following:

Marketing and sales are

Inbound logistics all processes activities that make or convince
Outbound logistics refers to
that are involved in the receiving, buyers to purchase the Service has to do with
Production include activities that activities that are related to
storing & internal distribution of company's products. Including maintaining the product after
convert inputs into outputs delivering the products and
the raw materials or components advertising, promotion, selling, sale through installation,
services to the customer.
of a product or service. pricing, channel selection and servicing, & upgrading.
retail management
1.10.2 PORTER’S VALUE CHAIN: SECONDARY
(SUPPORT) ACTIVITIES

The secondary (Support) activities of

the value chain consist of the
following:

4. The firm's infrastructure includes

2. Technology development relates to 3. Human resource management support activities within the firm that
1. Procurement includes support
the development of the product & refers to support activities that focus allows the firm to maintain its daily
activities related to obtaining services
service of the firm, internally & on workforce development of the firm operations. Activities from general
& goods so that the firm can sell to the
externally. Examples - R&D, product - includes recruitment and education, management, planning procedures,
end user - entering & managing
and/or process improvements, (re) as well as compensation, employee finance, accounting, public affairs and
supplier relations
design, developing new services retention quality management create value for
the firm