── .✦ ‧₊˚.
LOGiSTiCS & SUPPLY
CHAiN MANAGEMENT
WHAT iS LOGiSTiCS & SCM
1. Defining Logistics
Logistics involves planning, implementing, and controlling procedures for
transporting and storing goods efficiently.
The 5 R's of Logistics
Logistics involves getting:
• The right product,
• In the right way,
• In the right quantity and right quality,
• In the right place at the right time,
• For the right customer at the right cost.
2. Defining Supply Chain Management (SCM)
2.1. What is a Supply Chain?
A supply chain is a network of businesses involved in moving products or services
from suppliers to customers.
2.2. SCM Definition
Supply Chain Management (SCM) encompasses logistics and manages
relationships and activities to add value and maximize profitability.
• Logistics = Movement and storage (Transport/Warehousing).
• SCM = The full network and coordination from raw materials to the final
customer.
, ── .✦ ‧₊˚.
3. Distinguishing Logistics and SCM
3.1 The SCOR Model
The Supply Chain Operations Reference (SCOR) model is a framework used to
understand, improve, and manage supply chain performance. It consists of five
main processes:
1. Source: Get raw materials or parts.
2. Plan: Manage resources, demand, and supply.
3. Make: Manufacture goods.
4. Deliver: Distribute to customers.
5. Return: Handle returns of products/materials.
4. Supply Chain Views: Push vs. Pull
Supply View (PUSH) Demand View (PULL)
Supplier → Customer Customer → Supplier
Forecast driven: Demand driven:
• Products are made and pushed to • Products are made or moved after
stores before demand is known. an actual order is placed.
Examples: Examples:
• Winter jackets produced in summer • A restaurant cooking food only after
an order
, ── .✦ ‧₊˚.
5. The Evolution of Logistics and SCM
The industry shifted from handling bulky, low-value raw materials to high-value,
finished products due to six key developments:
1. Shift to transporting higher value goods: Electronics and sensitive products
require better tracking and handling.
2. Falling product/material prices: Lower product prices forced companies to cut
storage and transport costs to maintain margins. Driven by globalization, mass
production, and economies of scale.
3. Deregulation of transport: Reduced government rules led to more competition
and lower transport costs across the 5 principal modes (Road, Water, Rail,
Pipeline, Air).
4. Productivity improvements: Technology (automation, tracking) allowed
companies to do more with less.
5. Emphasis on inventory reduction: Strategies like Just-In-Time (JIT) reduce
expensive stock holding.
6. Changes in company structure:
• Specialization & Outsourcing: Focusing on core competencies and hiring
experts for the rest.
• Less Silo-based thinking: Departments collaborate rather than working in
isolation.
Key Success Factor: Time = Money. Speed is critical for competitiveness.
LOGiSTiCS & SUPPLY
CHAiN MANAGEMENT
WHAT iS LOGiSTiCS & SCM
1. Defining Logistics
Logistics involves planning, implementing, and controlling procedures for
transporting and storing goods efficiently.
The 5 R's of Logistics
Logistics involves getting:
• The right product,
• In the right way,
• In the right quantity and right quality,
• In the right place at the right time,
• For the right customer at the right cost.
2. Defining Supply Chain Management (SCM)
2.1. What is a Supply Chain?
A supply chain is a network of businesses involved in moving products or services
from suppliers to customers.
2.2. SCM Definition
Supply Chain Management (SCM) encompasses logistics and manages
relationships and activities to add value and maximize profitability.
• Logistics = Movement and storage (Transport/Warehousing).
• SCM = The full network and coordination from raw materials to the final
customer.
, ── .✦ ‧₊˚.
3. Distinguishing Logistics and SCM
3.1 The SCOR Model
The Supply Chain Operations Reference (SCOR) model is a framework used to
understand, improve, and manage supply chain performance. It consists of five
main processes:
1. Source: Get raw materials or parts.
2. Plan: Manage resources, demand, and supply.
3. Make: Manufacture goods.
4. Deliver: Distribute to customers.
5. Return: Handle returns of products/materials.
4. Supply Chain Views: Push vs. Pull
Supply View (PUSH) Demand View (PULL)
Supplier → Customer Customer → Supplier
Forecast driven: Demand driven:
• Products are made and pushed to • Products are made or moved after
stores before demand is known. an actual order is placed.
Examples: Examples:
• Winter jackets produced in summer • A restaurant cooking food only after
an order
, ── .✦ ‧₊˚.
5. The Evolution of Logistics and SCM
The industry shifted from handling bulky, low-value raw materials to high-value,
finished products due to six key developments:
1. Shift to transporting higher value goods: Electronics and sensitive products
require better tracking and handling.
2. Falling product/material prices: Lower product prices forced companies to cut
storage and transport costs to maintain margins. Driven by globalization, mass
production, and economies of scale.
3. Deregulation of transport: Reduced government rules led to more competition
and lower transport costs across the 5 principal modes (Road, Water, Rail,
Pipeline, Air).
4. Productivity improvements: Technology (automation, tracking) allowed
companies to do more with less.
5. Emphasis on inventory reduction: Strategies like Just-In-Time (JIT) reduce
expensive stock holding.
6. Changes in company structure:
• Specialization & Outsourcing: Focusing on core competencies and hiring
experts for the rest.
• Less Silo-based thinking: Departments collaborate rather than working in
isolation.
Key Success Factor: Time = Money. Speed is critical for competitiveness.
