Kwame Nkrumah University of

Science & Technology, Kumasi, Ghana

LOGISTICS & SUPPLY CHAIN MANAGEMENT

ISD252

Matilda Kokui Owusu­BioSupply Chain & Information Systems DepartmentSchool of BusinessCoHSSmkobio.ksb@knust.edu.gh

1

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ISD252-MKOBIO 2

SUPPLY CHAIN MANAGEMENT

UNIT 2

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ISD252-MKOBIO 3

UNIT OVERVIEW

After reading this unit you should be able to understand:

• The conceptof Valuechain, Supply chain, and

SupplyChainManagement.

• Keyissues in Supply Chain Management

• Components of supply chain management

• Types ofSupplychain management

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THE CONCEPT OF VALUE CHAIN

It is the process or activities by which a company adds

value to an item (input) including production, marketing,

and the provision of after-sales service. For example;

Manufacturingcompanies create value by acquiring

raw materials and using them to produce something

useful.

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THE CONCEPT OF VALUE CHAIN

Retailersbring together a range of products and

present them in a way that's convenient to

customers, sometimes supported by services such

as fittingrooms,personal shopperadviceand online

customer service/support

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THE CONCEPT OF VALUE CHAIN

Avalue chain is the full range ofactivities, including:

Design,

Production,

Marketing and

Distribution,

Thatbusinessesgo through to bring a product or service from

conception todeliveryto its customers.

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THE CONCEPT OF VALUE CHAIN CONT’D…

• The valuechain is amodeldeveloped byMichaelPorterin 1985

which isused to describe the process by whichbusinesses;

Receive raw materials,

Add value to the raw materials through various processes to

create a finished product, and

Then sell that end product to customers.

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PORTERS VALUE CHAIN

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VIDEO ON VALUE CHAIN

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DEFINITIONS OF SUPPLY CHAIN

• It is thesequence of processes involved in the production and

distribution of a commodity.

• A supply chain consists of all parties involved, directly or

indirectly, in fulfilling a customer request.

• The supply chain includes the manufacturer and suppliers,

transporters, warehouses, retailers, and customers themselves.

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TheCouncil of Logistics Management (CLM) defines

Supply Chain (SC) as;

Aglobal network of organizations that cooperate to

improve the flows of material and information

between suppliers and customers at thelowest

costandthe highest speed.

DEFINITIONS OF SUPPLY CHAIN

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It isdefinedas;

• The management of materials, information, and

finances as they move in a process from a supplier to

manufacturer to wholesaler to retailer to consumer.

• The management of the flow of goods and services.

SUPPLY CHAIN MANAGEMENT

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• It is the integration of key business processes

fromEnd userthroughoriginal suppliersthat

provideproducts, servicesandinformationthatadd

valuefor customers and other stakeholders. (Lambert

et al, 1998)

SUPPLY CHAIN MANAGEMENT DEFINED

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• The management of upstream and downstream relationships

with suppliers and customers to deliver superior customer

value.(ChritopherM, 1998)

• It involves the management of supply chain assets and

products, information and funds flows to maximize total

supply chain profitability. (ChoppraandMeindl2007)

SUPPLY CHAIN MANAGEMENT

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SCMinvolvesthree main flows:

• The Product flow: This includesthe movement of goods from a

supplier to a customer, as well as any customer returns or service

needs.

• The Information flow:Itconsistsof credit terms, payment

schedules, consignment and title ownership arrangements.

• The Finance flow: It involvestransmitting orders and updating the

status of delivery.

SUPPLY CHAIN MANAGEMENT CONT’D…

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From the definitions discussed, Supply Chain comprises the following;

Suppliers

Manufacturers

Distributors

Retailers and

Consumers/Users

{Upstream SC} {Internal SC} {Downstream Supply Chain}

Supplier Manufacturer Distributor Retailer Consumer/User

SUPPLY CHAIN ILLUSTRATED

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The supply chain can be broadly classified into three

part:Upstream, InternalandDownstream(Turban et all.,

2003, 2004).

• Upstreamsupply chain:This part of the supply chain is

mainly concerned with the procurement of raw materials. It

includes suppliers that could be manufacturers themselves

COMPONENT OF SUPPLY CHAIN

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• Internal supply chain:This part is mainly concerned with

transforming the inputs obtained in the upstream supply chain into

outputs. It starts from the time raw material comes to

anorganisationand continues till it gets transformed into finished

goods and is sent for distribution.

• Downstream supply chain:This part is mainly concerned with the

processes involved in delivering the finished products from the

internal supply chain to the final customers.

COMPONENTS OF SUPPLY CHAIN MANAGEMENT

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Warehousing

Warehousing

Transportation

Transportation

Vendors/plants/ports

Transportation

Factory

Transportation Customers

Information

flows

SUPPLY CHAIN FOR AN INDIVIDUAL FIRM

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KFC SUPPLY CHAIN

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The type of supply chains depend on the nature of the

company(industry) in question. The complexity of the supply

chain is also attributed to the processes of the company in

question.

Thefollowing are the types of supply chains that are generally found

in business (Turban et al., 2003, 2004):

 

SUPPLY CHAIN MODELS

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• Integrated made-to-stock supply chain model

• Continuous replenishment supply chain

• Build-to-order supply chain

• Channel assembly supplychain

http://carl.sandiego.edu/itmg350/types_of_supply_chain.htm

 

SUPPLY CHAIN MODELS

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• Build-to-order supply chain

The build-to-order supply chain model begins processing a

customer order as soon as it is received from the customer.

Typical of the computer and Technology Industry, specialist

medical care andhigh end Jewelrymakers.

SUPPLY CHAIN MODELS

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VIDEO ON DELL COMPUTERS

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• Channel assembly supply chain

The channel assembly supply chain model is an improvement

on the build-to-order model. The parts of a product are

assembled as the product moves through the distribution

channel. It incorporates strategic alliances with third party

logistics company.

SUPPLY CHAIN MODELS

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•Integrated made-to-stock supply chain model

The integrated made-to-stock supply chain model meets customer

demand in real time. In this model, finished goods are stocked in the

inventory and once a demand occurs, production stocks the goods

again.

SUPPLY CHAIN MODELS

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• Continuous replenishment supply chain

The continuous replenishment supply chain model constantly replenishes

the inventory by continuously interacting with suppliers. Real-time

information is required regarding demand changes so that the desired

replenishment schedules can be maintained. Used in businesses

where demand is fairly stable.

SUPPLY CHAIN MODELS

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VIDEOS ON SUPPLY CHAIN

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• The global objective of a Supply Chain iscustomers’ satisfaction.

• Additionally,individual components of the SC aim at maximizing their shareholder value by maximizing the Return on Investment (ROI) of their investors.

THE TACTICAL OBJECTIVES OF SUPPLY CHAIN

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Supply chain management issues concern activities of

the firm at various levels of decision making, ranging

from Operational level to Strategic level via Tactical

level. Meaning it follows the organizational structure.

DECISION MAKING IN SCM

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• The Strategic level

The decision making at this level is made with long term objectives

and with long lasting effects.These include decisions regarding;

Location of various facilities, including the

manufacturing/Production plant

Distribution warehouses

Sourcing

The structure of the distribution channel.

DECISION MAKING IN SCM

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• The Tactical level

Decision making at this level is concerned with;

• Purchasing

• Production functions,

• Inventory policies and

• Transportation strategies.

These decisions will be usually updated on an annual basis.

DECISION MAKING IN SCM

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• The Operational level

Decision making at operational level will concern day to day management of activities such as;

• Scheduling,

• Routing and

• Vehicle loading

DECISION MAKING IN SCM

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• Product design:

This is concerned with the design of the product and its impact on total cost of the product.

• Customer value:

The key issue is the definition of customer value in an age of increasing consumer power.

KEY ISSUES IN SCM

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• Information Technology andDecisionsupport systems:

The concerns of contemporary supply chain management are the efficient use of modern technology including the Internet and computerised decision support systems.

KEY ISSUES IN SCM

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• Retailersget a choice of goods and also carry less stock and hence can offergood serviceto customers.

• Supplychains make movements simple, cost-effective and efficient as transport is simpler.

• Expertisecan be developed in a particular type of operation.

BENEFITS OF SCM

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• Supplychains bridge the gaps between the suppliers and the customers.

• Theyallow business to conduct operations at an appropriate time and place for the benefits of suppliers and customers.

BENEFITS OF SCM

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1. Logistics management is focused more on company-wide

physical movement of products and materials

2. SCM encompasses logistics management in addition to having

an overall view of materials, information, financial and

operational processes.

3. SCM focuses on both internal and external sources and plans for

the optimal outcomes.

DIFFERENCE BETWEEN LOGISTICS AND SCM

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• Logistics Analyst

• Logistics Consultant

• Customer Service Manager

• International Logistics Manager

• Inventory Control Manager

• Logistics Engineer

• Logistics Manager

• Logistics Services Salesperson

• Logistics SoftwareManager

LOGISTICS & SCM JOBS

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• Materials Manager

• Production Manager

• Purchasing Manager

• Supply Chain Manager

• Systems Support Manager (MIS)

• Transportation Manager

• Vendor Managed Inventory Coordinator

• Warehouse OperationsManager

JOBS IN LOGISTICS&SCM

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GROUP ASSIGNMENT

Identify a business operating within the

KNUST environs and;

1. Identify theirvalue chain activities

2. Illustrate their Supply Chain

3. Determine their Supply chain Model.

ISD470-MKOBIO 48

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GROUP ASSIGNMENT CONT’D

Instructions:

• Form groups of ten members

• Submit the assignment on Schoology

• Deadline for submission is

– 8:00pmon the28thof February 2019

• Indicate the group leader and only the group leader can submit

assignments on behalf of the group for the wholeof

thissemester.

• Note groups that have non members of theschoologygroup

would be penalized.

ISD470-MKOBIO 49

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ISD252-MKOBIO 50

End of Lecture

Thank You