Introduction to LOGISTICS & Supply Chain Management Qafqaz University Center for Entrepreneurship Development and Research Ahmad Badalov Research Assistant, Member of CEDR

Simple Description of Logistics  The easiest understanable definition is below and known as 7R  Collection of activities to deliver  the Right amount of Right material  to the Right consumer  at the Right conditions  at the Right place  at the Right time  at the Right cost  Logistic is responsible for flow of materials along the supply chain,

The Role of Logistics  Logistics is responsible for the flow of material : material  from suppliers into organizations,  through operations within organizations,  and to customers External supplier Operations within organizations External customers Internal supplier Internal customer Materials management Logistics Inbound logistics Outbound logistics

Supply Chain  is a series of activities which provide the flow of goods and services from initial suppliers to manufacturer and final customers.  More complex logistics system in which raw materials are converted into finished products and then distributed to the final users ORGANISATION Upstream activitiesDownstream activities 1. tier supplier 2. tier supplier 3. tier supplier Initial supplier 1. tier customer 2. tier customer 3. tier customer final customer

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CHAPTER 2 INTEGRATING the SUPPLY CHAIN

Pressure to improve logistics  Besides economical benefits, other factors also encourage to improve logistics. These are;  Knowledgeable customers,  Fierce competition,  Large retail chains,  Changes in retail markets,  Growing in international trade,  New types of organizations,  Improvements in communications  Outsourcing peripheral activities,  Increasing co-operations  ……

9-18 Factors Effective in Logistics  Development in communication communication  Customer relations Customer  Other important factors  Globalizations Globalizations  Outsourcing Outsourcing  Postponement  Cross-docking Cross-docking  Direct delivery  Other stock reduction methods  Increasing environmental concerns  More collaboration along supply chain

Integrating Logistics  Related activities add value to the final products,  These are managed seperately,  Their aims might be conflict,  These conflicts cause some problems Operations Warehousing Stock control Materials handling SuppliersCustomers Procurement Inward transport Receiving Picking Consolidating Physical distribution Outward transport returns

Integrating Logistics  These problems are;  Different, often conflicting objectives within organization  Duplicating effort and reducing productivity  Worse communications and information flows between the departments  Reducing co-ordination between parts  Increasing uncertainty and delays along the supply chain  Making planning more difficult  Introducing unnecessary buffers between the parts,  Obscuring important information, such as total logistic costs  Giving logistics a low status within an organization

Integrating Logistics  The obvious way of avoiding these problems is  to consider logistics not as a series of distinct activities,  but as a single integrated function  Then all parts work together to get the best result,  It is difficult to integrate all the logistics but it can be three levels of integration:  Separate activities  Integration within the organization  Integration along the supply chain Integration

Benefits of Integration of Logistics  Genuine co-operation between all parts with shared information  Lower cost due to  balanced operations, lower stocks, less expediting, Economies of scale  Elimination of activities that do not add value….  Improved performance due to  Accurate forecasting, Better planning, Higher productivity of resources…..  Improved material flows  Better customer service, with shorter lead times, faster deliveries  More flexibility, organizations reacting faster to changing conditions  Standardized procedures, becoming routine and well-practiced with less duplication of effort, information, planning, so on…  Reliable quality and fewer inspection, with integrated quality management programs

What is ‘Materials’  All the things that an organization moves to create its products.  Power station : brings coal from a mine,  Farmer : moves potatoes to a wholesaler,  TV company : delivers entertainment to its viewers  So on…..  raw materials, components, finished products,  people, information, paperwork, messages,  knowledge, money, energy and  anything else needed by operations…..

Communications  Describe product,  Demand price,  Fill order form,  Confirm order,  Contract terms, Things to do in order to buy something  Shipping papers  Financial arrangements,  Delivery details,  Special conditions,  invoices,  etc. In the past, all of these had to be printed and posted between organizations, lots of paperworkpaperwork In 1990’s EDI introduced to make things easier,EDI After the ’s, e-purchasing, e-procerument and e-everything developed item coding (barcode) ve EFT have been developed to support EDIbarcodeEFT EDI: prepares order; barcode follows movement; EFT pays

operations Logistics activities SuppliersCustomer Suppliers Operations Customers Suppliers Operations Customers Integration within the organizations Integration along the supply chain Logistics Integration Levels SuppliersCustomer Customers

Raw Materials Supplier Manufacture/Process Distrubition Customer Consumer

Paperworks

EDI ( Electronic Data Interchange )

Barcode

QR_Code Quick Respond Code)

EFT (Electronic Fund Transfer)

Customer Relations  Logistics costs needs to be lowered in order to be competitive  Lower transport costs make the product feasible to sell over a wider geographic area  What is important for customer:  Lead time (time between ordering and receiving)  Costs

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Cross-Docking