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Logistics System
F L O W O F G O O D S
F L O W O F I N F O R M A T I O N S
CUSTOMER SUPPLIER MANUFACTURING PROCUREMENT PHYSICAL
DISTRIBUTION
3
D e f i n i t i o n
Logistics management is that part of the supply chain process that plans, implements, and controls the efficient, effective
flow and storage of
goods, services, and related information from the point-of-origin to the point-of-consumption in order to meet customers' requirements. (Council of Logistics Management (CLM), 1986).
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Flow of Logistics
SUPPLIER CARRIER MANUFACTURER CARRIER DISTRIBUTOR CUSTOMER CARRIER
5
Fungsi-fungsi Utama Sistem Logistik
TRANSPORTASI
PERGUDANGAN
PERSEDIAAN
SISTEM
INFORMASI
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Supply Chain
OUTBOUND / PHYSICAL DISTRIBUTION INBOUND
Modified from Russell & Taylor (2006)
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Illustration of Supply Chain
INBOUND “MINYAK GORENG”
INBOUND “CPO”
PABRIK
CPO
OUTBOUND / DISTRIBUSI FISIK “MINYAK
GORENG”
OUTBOUND / DISTRIBUSI FISIK
“CPO”
PABRIK
MINYAK
GORENG
Modified from Russell & Taylor (2006)
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Supply Chain Management
Supply Chain Management is the
integration of key business processes from end
user through original suppliers that provides products, services, and information that add value for customers and other stakeholders (The Global Supply Chain Forum).
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SUPPLY CHAIN MANAGEMENT: INTEGRATING AND MANAGING BUSINESS PROCESSES ACROSS THE SUPPLY CHAIN
Logistics Marketing & Sales
Finance R&D
Production
Purchasing
MANUFACTURER CUSTOMER
CONSUMER/
END-CUSTOMER
TIER 1
SUPPLIER
TIER 2
SUPPLIER
PRODUCTION FLOW
INFORMATION FLOW
CUSTOMER RELATIONSHIP MANAGEMENT
CUSTOMER SERVICE MANAGEMENT
DEMAND MANAGEMENT
ORDER FULFILLMENT
MANUFACTURING FLOW MANAGEMENT
SUPPLIER RELATIONSHIP MANAGEMENT
PRODUCT DEVELOPMENT AND COMERCIALIZATION
RETURNS MANAGEMENT
SU
PP
LY
CH
AIN
BU
SIN
ES
S P
RO
CE
SS
ES
Source: Lambert et al. (1998)
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Customer Relationship Management
• The customer relationship management process provides the structure for how the relationship with the customer is developed and maintenanced.
• Performance evaluations are undertaken to analyze the levels of service provided to customers as well as customer profitability.
Source: Lambert et al. (1998)
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Customer Service Management
• The customer service management is the firm’s face to the customer. It becomes the key point of contact for administering the product/service agreement.
• Customer service provides the single source of customer information, such as product availability, shipping dates and order status.
Source: Lambert et al. (1998)
12
Demand Management
• The demand management process needs to balance the customers’ requirements with the firm’s supply capabilities.
• Part of managing demand involves attempting to determine what and when customers will purchase.
• A good demand management system uses point-of-sale and “key” customer data to reduce uncertainty and provide efficient flows throughout the supply chain.
Source: Lambert et al. (1998)
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Order Fulfillment
• The key to effective SCM is meeting customer need dates.
• Effective order fulfillment requires integration of the firm’s manufacturing, logistics and marketing plan.
• The design and operation of the network has a significant influence on the cost and performance of the system.
Source: Lambert et al. (1998)
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Manufacturing Flow Management [1]
• In traditional make-to-stock firms:
– The manufacturing process produced and supplied products to the distribution channel based on historical forecasts.
– Products were pushed through the plant to meet a schedule.
– Often the wrong mix of products was produced.
• With SCM:
– Product is pulled through the plant based on customer needs.
– Manufacturing processes must be flexible to respond to market changes.
– Changes in the manufacturing flow process lead to shorter cycle times meaning improved responsiveness to customers.
Source: Lambert et al. (1998)
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Manufacturing Flow Management [2]
• The manufacturing flow process deals with making the
products and establishing the manufacturing flexibility
needed to serve the target markets.
• Manufacturing flow at the operational level looks like
operations management internal to the firm.
However, certain characteristics of the process are designed
to integrate internal operations management with activities
in the supply chain.
Source: Lambert et al. (1998)
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Supplier Relationship Management
• Supplier relationship management is the process that defines how a company interacts with its suppliers.
• Long-term partnerships are developed with a small core group of suppliers.
• The purchasing function develops rapid communication mechanisms such as EDI and internet linkages to quickly transfer requirements.
• It is important for the supplier relationships to be win-win. If both parties do not gain from the relationship, the incentive to be in the relationship is diminished and it will likely dissolve.
Source: Lambert et al. (1998)
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Product Development and Comercialization
• Supply chain management includes integrating customers and suppliers into the product development process in order to reduce time to market.
• It is critical to have the right people from the internal functional silos along with key customers and suppliers involved in the product development and commercialization process.
Source: Lambert et al. (1998)
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Returns Management
• While many firms neglect the returns process because management does not believe it is important, this process can assist the firm in achieving a sustainable competitive advantage.
• As part of this sub process, the team develops procedures for analyzing return rates and tracing the returns back to the root causes.
Source: Lambert et al. (1998)
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Implementing Integrated SCM
• The implementation of SCM involves: – identifying the supply chain members with whom it is critical to link,
– the processes to be linked with each of these key members,
– and the type/level of integration that applies to each process link.
• If the proper coordination mechanisms are not in place across the various functions, the supply chain processes will be neither effective nor efficient.
Source: Lambert et al. (1998)
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Supply Chain Management Framework: Elements and Key Decisions
SUPPLY CHAIN
BUSINESS
PROCESSSES
SUPPLY CHAIN
MANAGEMENT
COMPONENTS
SUPPLY CHAIN
NETWORK
STRUCTURE
Who are the key
supply chain
members with whom
to link processes?
What processes
should be linked with
each of these key
supply chain
members?
What level of integration and
management should be
applied for each process link?
Source: Lambert et al. (1998)
21 INFORMATION ARCHITECTURE, DATA BASE STRATEGY, INFORMATION VISIBILITY
MARKETING R & D LOGISTICS PRODUCTION PURCHASING FINANCE
CUSTOMER
RELATIONSHIP
MANAGEMENT
CUSTOMER
SERVICE
MANAGEMENT
DEMAND
MANAGEMENT
ORDER
FULFILLMENT
MANUFACTURING
FLOW
MANAGEMENT
SUPPLIER
RELATIONSHIP
MANAGEMENT
PRODUCT
DEVELOPMENT AND
COMERCIALIZATION
RETURNS
MANAGEMENT
Account
Management Requirement
Definition
Requirements
Definition
Manufacturing
Strategy Sourcing
Strategy
Customer
Profitability
Account
Administration Technical
Service
Performance
Specifications
Coordinated
Execution Priority
Assessment
Cost to
Serve
Demand
Planning
Process
Requirements Forecasting
Capability
Planning Sourcing Tradeoff
Analysis
Special
Orders Environmental
Requirements
Network
Planning Plant
Direct
Selected
Supplier(s)
Distribution
Cost
Packaging
Specifications Process
Stability
Prioritization
Criteria
Production
Planning Integrated
Supply
Manufacturing
Cost
Order
Booking Material
Specifications
Inbound
Flow
Integrated
Planning Supplier
Management
Materials
Cost
Business
Plan Product
Design
Movement
Requirements
Process
Specifications Material
Specification R&D
Cost
Product
Life Cycle
Product
Design
Reverse
Logistics
Re-
Manufacturing Material
Specification
Revenue
& Costs
TYPICAL
FUNCTIONAL SILOS
BUSINESS
PROCESSES
S U
P
P
L
I E
R
S
C U
S
T
O
M
E
R
S
Sourc
e: Lam
bert
et al. (
1998)
Supply Chain Management: Implementation
22
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