1. Inter company relations and purchasing policy
Purchasing and Supply Chain Management
Inter company relations and purchasing policy
(Logistics and supply chains)

2. Logistics and Supply Chains
What is Logistics
The total management of the
key operational functions in the
supply chain – procurement, production and distribution. Procurement includes purchasing and product
development.
The production function includes
manufacturing and assembling,
while the distribution function involves warehousing,
inventory, transport and delivery.

3. Logistics and Supply Chains

4. Logistics and Supply Chains
Materials Management
is the planning, organisation and control of all aspects
of inventory embracing procurement, warehousing, work
in progress and distribution of finished goods.
Reverse Logistics
is the process of planning, implementation and controlling
the efficient, cost effective flow of raw materials, in process
inventory, finished goods and related information from the
point of consumption to the point of origin for the purpose
of recapturing value or proper disposal.

5. Logistics and Supply Chains
A Supply Chain is that network of organisations that are involved,
through upstream and downstream linkages, in the different processes
and activities that produce value in the form of products and services
in the hands of the ultimate customer or consumer.
Types of Supply Chain
Can be classified according to:
Customer/supplier characteristics – concentrated, batch, retail and distribution
Virtuality - information
Scope – international, regional,
Service
Complexity – direct, extended, ultimate
Products – end product (build to forecast, build to order)
Purpose and value

6. Supply Chain Management
Logistics and Supply Chains
Customer
relationship
management
Quality of products and services
Reverse logistics
Returns
management
Customer service
management
Product development
& commercialisation
Demand management
Supply Chain Management
– Eight Processes
Balancing requirements with capabilities.... active influencing demand
Supplier relationship
management
Order
fulfillment
Manufacturing flow
management
Operations management,
Quick response manufacturing
Company interaction with suppliers, short-term, long-term - intensity

7. Five Categories of Supply Chain Risk! Internal risks/external risks
Logistics and Supply Chains
Environ – economic, political, social
Related with supply chain
Supply Chain Vulnerability
Five Categories of Supply Chain Risk!
Internal risks/external risks
Lack of
Ownership
Decision
Risks
Inertia
Risks
Chaos
Risks
J.I.T
Relationship
Risks
Routine
Little capacity or stock reserves
No boundaries between buyer and supplier, complicated networks
Information

8. Ten ways of Managing Supply Chain Risk
Logistics and Supply Chains
Ten ways of Managing Supply Chain Risk
Diversification – multiple sourcing 1
Stockpiling – inventory as a buffer 2
Redundancy – maintaining excess production, storage... 3
Insurance – against losses 4
Supplier selection – more careful assessment of suppliers 5
Supplier development – working closely with suppliers 6
Contractual obligation – imposing legal obligations 7
Collaborative initiatives – spreading risks 8
Rationalisation of the product range 9
Localised sourcing – shortening transport distances 10

9. Logistics and Supply Chains
Porter’s Value Chain Model
Five Primary Activities
Inbound logistics
Operations
Outbound logistics
Marketing and sales
Service
Four Support Activities
Firm infrastructure
Human resources
Technology development
Procurement

10. Ten Major Cost Drivers – Value Chains
Logistics and Supply Chains
Ten Major Cost Drivers – Value Chains
Economic or diseconomies of scale (large requirements – inelastic supply) 1
Learning and spillovers (from one industry to another via suppliers) 2
Capacity utilisation (relative stable costs) 3
Linkages among activities (influence on performance) 4
Inter-relationships 5
Degree of vertical integration (f.e. own transport vehicles) 6
Timing of market entry (being the first on market) 7
Firms policy of cost or differentiation 8
Geographic location 9
Institutional factors (government regulations, taxation) 10

11. Strategic Cost Analysis
Logistics and Supply Chains
Test the cost reduction
strategy for sustainability
Main Steps in
Strategic Cost Analysis
Ensure cost reduction
efforts do not differentiate
Develop a strategy lower
relative cost position
Identify competitor
value chains
Diagnose the cost
drivers of each activity
Identify value chain &
assign costs & assets to it

12. Range of expenditures as percentage of the sales
Logistics and Supply Chains
Range of expenditures as percentage of the sales
Purchasing
55 – 65 %
Transport
3,5 – 7 %
Labor
2,5 – 6 %
Inventory
3 – 9 %
System and administration
1,5 – 3 %
Facilities
0,7 – 2 %

13. Delay in supply of goods or services results in a slower cycle time and adversely impacts on cash flow

14. Some perceptions of ‘lead time’

15. Eight types of lead time

16. Component parts of lead times

17. Component parts of lead times (Continued)