Logistics & Supply Chain Overview

Logistics & Supply Chain

• Operations management is the management of systems and processes that create goods and/or services.
• Sustainability focuses on using resources without harming ecological systems.
• Every aspect of a business impacts, and is impacted by, operations.
• Financial services include stock market analysis, brokerage, investment banking, and loans.
• Marketing services encompass market analysis, research, advertising, and product management.
• Accounting services include corporate accounting, public accounting, and budget analysis.
• Information services cover corporate intelligence, library services, and management information systems design.
• Goods are physical items like raw materials, parts, assemblies, and final products (e.g., cars, computers, shampoo).
• Services are activities offering a combination of time, location, form, or psychological value (e.g., air travel, education, legal counsel).
• Products are rarely purely good or service; they often contain combinations.

Characteristics of Goods and Services

• Goods are tangible, low customer contact, high uniformity, measurement is easy, high inventory, and usually patentable.
• Services are intangible, high customer contact, low uniformity, measurement is difficult, low inventory, and not usually patentable.

Supply Chain

• Supply chain is the sequence of organizations, facilities, functions, and activities involved in producing and delivering a product or service.
• The chain's core is raw materials to Supplier → Manufacturer → Distributor → Retailer → Consumer.
• Retailer → consumer/customer is the only B2C relation in the chain.
• All elements (except the consumer/customer) are typically B2B relations.

Supply Chain Management (SCM)

• Aims to strategically coordinate the supply chain to integrate supply and demand management.
• Problems include fluctuating inventory levels, stock-outs, and late deliveries.

Supply Chain in 2024

• COVID disrupted global supply chains causing factory slowdowns, supply shortages and lagging recovery.
• Re-designing SCM to be more resilient to future crises was a result of COVID.
• Integrated networks are preferred over linear supply chains for better performance.
• Automation and digital enablement are important for future resilience.

Elements of Supply Chain Management

• Central to this is translating customer demand into activities along the supply chain.

Operations Decisions

• What: resources and their quantities.
• When: resource needs and scheduling.
• Where: work locations.
• How: product/service design, work processes, resource allocation.
• Who: personnel assignments.

Decision-making process

• Models frequently integrate with qualitative data.
• Key factors in using models include purpose, usage, interpretation, and assumptions.
• Models simplify but can struggle with complex real-world factors.

Hard and Soft Skills

• Hard skills are measurable, technical abilities.
• Soft skills are interpersonal and social abilities, less measurable.
• Data-driven decisions are essential for many operational roles.

Sustainability

• Organizations are increasingly incorporating factors beyond the purely environmental and economic into their decisions.
• Businesses consider sustainability measures in all areas e.g,. managing waste, and outsourcing.

Competitiveness, strategy, and productivity

• Companies fail due to neglecting operations strategy, failing to identify competitive threats and opportunities, over-emphasising short-term financial gains, neglecting process improvement and resource investments, poor internal communication, and failing to consider current customer needs.

Aggregated planning

• Companies need to adjust to demand and capacity fluctuations, which is done via aggregating planning.
• By grouping products instead of dealing with individual products they smooth production, which is cheaper and avoids under/over-production.
• Using forecasts to meet demand with capacity.
• Planning horizon ranges from 2 to 18 months.
• Methods include managing resource like inventories, workforce and subcontractors.

Master Production Schedule

• MPS (master production schedule) is a result of disaggregating aggregated planning, and shows what end-items are needed when.
• Key elements of the MPS are starting inventory, forecasts and customer orders.
• Outputs of an MPS are projected finished goods inventory, Master Production Schedule and UNcommitted inventory.

Forecasting

• Forecasting is an estimate of a variable's future value.
• Crucial for strategic business decisions.
• Short-term forecasts (3-12 month) are used to manage day-to-day operations, while long-term forecasts inform strategic choices like product lines and facility layouts.

Forecasting techniques

• Techniques vary; qualitative techniques use experience and judgment and quantitative use measurable data.
• Techniques like the moving average and exponential smoothing average out random fluctuations found in data.

Inventory Management

• Inventory is vital but costly, to meet demand while not over-stocking.
• There are different types of inventory: Raw materials, work in progress, finished goods, tools and supplies and goods in transit.
• Decisions must be made about amount and location of inventory, as well as delivery times.
• Techniques like Economic Order Quantity (EOQ) and Reorder Point (ROP) help determine optimal orders sizes and when to place them.
• Safety stock helps to prevent shortages and avoid stock out risks.

MRP (Material Requirements Planning)

• Techniques to estimate requirements for materials, parts, subassemblies, components, etc. for production.
• Involves planning based on end-item (final product) requirements.
• Works best with stable production environments.
• Requires accurate data – errors in data or forecasts lead to inefficiencies.

Lean Operations

• A flexible operational system that uses fewer resources, achieving quick turnover, and lower costs, while offering high quality.
• Principles include identifying customer value, focus on processes to deliver value, reducing waste, and a pull system for making output as the demand arises.
• Lean systems reduce waste, making operations more efficient than traditional methods.

Logistics

• Logistics manages the flow of materials, service, cash and information. This includes incoming and outgoings shipments alongside traffic management, using technology like radio frequency identification (RFID) to improve tracking and efficiency.
• Third-party logistics (3PL) provides logistics services to companies who don't want to manage their own supply chains.

Other General Points

• It's important to consider cost, accuracy, data availability, and forecast horizon when choosing a forecasting technique.
• Supplier management is critical for effective supply chain integration. This includes choosing, auditing, certifying, and developing relationships with suppliers.

Explore the fundamental concepts of operations management, sustainability, and the intricacies of logistics and supply chain. Understand how various services including financial, marketing, accounting, and information services interact within a business. This quiz provides insights into the definitions of goods and services and their roles in the business environment.