From Logistics Management to Supply Chain Management Speaker: Chen Yuh-Wen

Content Basic Concepts of Logistics Management Basic Concepts of Supply Chain Management From Logistics Management to Supply Chain Management: A Simple Software Future Works

Basic Concepts of Logistics Management Definition Logistics Strategy and Planning Logistics Network Relative Importance of Service Elements Customer Order Processing Transportation System Storage and Handling System Inventory Policy

Logistics Strategy Objectives of logistics strategy –Cost reduction –Capital reduction –Service improvement

Major Planning Areas of Logistics Management Customer service goals Facility location strategy Inventory decisions Transport strategy

Logistics Network The Logistics Network consists of: Facilities: Vendors, Manufacturing Centers, Warehouse/ Distribution Centers, and Customers Raw materials and finished products that flow between the facilities.

Supply Sources: plants vendors ports Regional Warehouses: stocking points Field Warehouses: stocking points Customers, demand centers sinks Production/ purchase costs Inventory & warehousing costs Transportation costs Inventory & warehousing costs Transportation costs © Copyright 1999 D. Simchi-Levi, P. Kaminsky & E. Simchi-Levi

The objective of Logistics Management is to balance service level against Production/ purchasing costs Inventory costs Facility costs (storage, handling and fixed costs) Transportation costs Lost Sales Cost

Relative Importance of Service Elements

Customer Order Processing

Transportation System

Storage and Handling System

Inventory Policy

Basic Concepts of Supply Chain Management Definition The Dynamics of the Supply Chain: The Bullwhip Effect Strategic Partnering Postponement IT and Decision Support System..

Definition of SCM Definition: Supply Chain Management is 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 requirements. Notice: –Every partner is involved –Systems approach to reducing costs –Integration is the key

Supplier Partner 1 Supplier Partner 2 Enterprise Mfg. Partner 3 Mfg. Partner 2 Logistics Supplier 1 Mfg. Partner 1 Logistics Supplier 2 Customer 3 Customer 2 Customer 1

The Dynamics of the Supply Chain : The Bullwhip Effect Order Size Time Source: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998 Customer Demand Customer Demand Retailer Orders Distributor Orders Production Plan

Strategic Partnering Advanced Information Systems Top Management Commitment Mutual Trust

Postponement Benetton … Old Manufacturing Process Spin or Purchase Yarn Dye Yarn Finish Yarn Manufacture Garment Parts Join Parts

Postponement Benetton … New Manufacturing Process Spin or Purchase Yarn Manufacture Garment Parts Join Parts Dye Garment Finish Garment This step is postponed

IT and Decision Support System

From Logistics Management to Supply Chain Management Integration –Information Technology –Database Sharing –Work Language (Code) –Global Optimization A Simple Model D:\ 企業供應鏈管理決策模型之研究.ppt D:\ 企業供應鏈管理決策模型之研究.ppt

Future Work

Suggested Future Researches Alliances and SCM Allocation Problem and SCM Intelligent SCM