1. Supply Chain Management 3B Workshop 1

2. Section 2: Introduction to Logistics

3. Logistics and the Supply Chain
Logistics and the supply chain are concerned with physical and information flows, and storage from raw materials through to the final distribution of the finished product.
Supply chain = a network of partners who collectively convert a basic commodity into a finished product which is valued by customers.
Logistics = the task of coordinating material flow and information flow across the supply chain to meet end-customer needs.

4. Supply Network Upstream Downstream Inputs Outputs Focal Firm
End Customers
Second-tier suppliers
First-tier suppliers
First-tier Customers
Second-tier Customers
Focal Firm
Primary Manufacturers
Inbound Logistics
Internal Logistics
Outbound Logistics
Supply Chain Management

5. Second-tier suppliers
Material Flow
The flow of physical goods from suppliers to final customers- KEEP IT FLOWING! “Synchronous”
Upstream
Focal Firm:
Manufacturer
Inputs
Lead time/
MOQ
Second-tier suppliers
First-tier suppliers
Production Requirements
Lead time
MOQ
Primary Manufacturers
2 weeks/ 1000 $2
R35
24 hours
2,000
10,000
R100
5 weeks/ 5000
R475
2 days
500
450
R655
8 weeks/ 300
$500
3 weeks
1,000
300
EUR25
8 weeks/100
Inbound Logistics
Internal Logistics
Supply Chain Management

6. What happens if materials don’t flow?
Material Flow
What happens if materials don’t flow?
Build-up of inventory
Storage costs
Production line delays
Possible production switching costs
Unable to manufacture/deliver final product to customer
Penalty clauses
Emergency shipments- airfreight/road
Too much inventory due to emergency orders
Miss the boat- expos, shows, deadlines, departure dates
Lose customers

7. Second-tier suppliers
Information Flow
Flow of demand data from the end customer to purchasers and suppliers; and supply data from suppliers to the retailer so that material flows can be accurately planned, controlled and optimised.
Focal Firm:
Manufacturer
Lead time/
MOQ
Second-tier suppliers
First-tier suppliers
Production Requirements
Lead time
MOQ
Primary Manufacturers
2 weeks/ 1000 $2
R35
24 hours
2,000
10,000
R100
5 weeks/ 5000
R475
2 days
500
450
R655
8 weeks/ 300
$500
3 weeks
1,000
300
EUR25
8 weeks/100
Supply Data
Demand Data
Information Integration

8. Information Flow Benefits of Information Technology Increased speed
Accuracy and consistency
Supply Chain sophistication
Visibility- where are raws/goods in-transit etc.?
Eliminate mundane and time-consuming data capturing
Immediate access to required data across departments
Search functions vs. manual checking of archived files
Planning- short/medium/long term; contingency
Integration- info sharing

9. Section 3: Channels of Supply and Distribution

10. Channels of Distribution
Organisations who participate in the flow of goods, services, information and money from the point of production to the final point of consumption. Logistics Channel- Network of intermediaries engaged in the transfer, storage, handling, transportation and communication functions that contribute to the efficient flow of goods.

11. Marketing Channels
The way in which goods and services are made available for use/consumption by the consumer
Direct selling
Selling through intermediaries
Manufacturer to Retailer to Customer
Manufacturer to Wholesaler to Customer
Manufacturer to Agent to Retailer to Wholesaler to Customer
Dual distribution
Reverse channels- waste, recycling, returns

12. Marketing and Logistics
4 Ps of Marketing
PRODUCT
PRICE
PLACE
PROMOTION
7 Rs of Customer Service The right PRODUCT, in the right QUANTITY, in the right CONDITION, at the right PLACE, at the right TIME, for the right CUSTOMER, at the right PRICE
***Logistics has a direct impact on these aspects of Marketing and Customer Service***