SOURCING AND LOGISTICS

MANAGEMENT
Dr. Mobashar Mubarik _ Lec01 & Lec02
 • Supply chain management (SCM) is management
of the flow of goods, data, and finances related to a
product or service, from the procurement of raw
materials to the delivery of the product at its final
SUPPLY CHAIN destination.

MANAGEMENT:
• Supply chain management is the optimization of
Definitions products creation and flow from raw material
sourcing to production, logistics and delivery to
end user/customer.
 Why is SCM essential & what is impact on
business performance?
• Cost efficiency:
• Customer satisfaction
Importance • Competitive advantage
• Risk mitigation
of Supply • Globalization
Chain • Innovation

Management • Sustainability
• Resource efficiency
• Supply chain visibility
• Strategic alignment
Key Supply Chain
Components
1. Suppliers:
Suppliers provide the raw materials, components, and
services needed to manufacture or deliver products.
Effective supplier management is essential for quality, cost
control, and reliability.
2. Manufacturers/producers:
Manufacturers transform raw materials and components
into finished products.
Production processes and quality control are crucial for
meeting demand and maintaining product quality.
Key Supply Chain Components
3. Distributors and wholesalers:
Distributors and wholesalers facilitate the movement of
products from manufacturers to retailers or end customers.
They often manage inventory and provide value-added
services like packaging and labeling.
4. Retailers:
Retailers sell products directly to consumers through
physical stores, e-commerce platforms, or other channels.
They play a critical role in demand forecasting and
customer service.
5. Customers/end users:
Customers are the ultimate destination of products and
services in the supply chain.
Their demands and preferences drive the entire supply chain
process.
y Chain Components
6. Transportation:
Transportation includes modes such as road, rail, air, sea, and pipelines.
It is responsible for the physical movement of goods between supply chain
stages.
7. Warehousing and storage:
Warehousing facilities store products at various stages of the supply chain.
They provide inventory management, order picking, and distribution services.
8. Inventory management:
Inventory management ensures the right quantity of products is available at the
right time and place.
Balancing inventory levels helps meet customer demand while minimizing
carrying costs.
9. Information systems and technology:
Information systems and technology support supply chain planning, execution,
and coordination.
Key Supply Chain Components
10. Logistics and Distribution: - Logistics encompasses the
planning, execution, and control of product flow. - Efficient
logistics optimize transportation, warehousing, and
distribution operations.
11. Supply Chain Finance: - Supply chain finance involves
managing financial transactions and relationships within the
supply chain. - It includes payment terms, credit, and
financing options.
12. Risk Management: - Risk management identifies,
assesses, and mitigates potential disruptions in the supply
chain. - Strategies include contingency planning and supply
chain resilience.
13. Sustainability and Compliance: - Sustainability
initiatives focus on reducing environmental impact and
promoting ethical practices. - Compliance ensures adherence
to legal and regulatory requirements.
Key Supply
Chain
Components
14. Supply chain professionals: -
skilled professionals, including
supply chain managers, analysts,
and logistics experts, are essential
for effective supply chain
management.
Supply Chain vs.
Logistics
Supply chain management (SCM)
• Imagine a big puzzle that includes all the steps needed to make and deliver
a product to a customer. Supply chain management is like the person who
looks at the entire puzzle and makes sure all the pieces fit together
smoothly.

• In simple words, scm is responsible for planning, coordinating, and

overseeing the whole journey of a product, from getting raw materials to
making it, and finally delivering it to the customer. SCM thinks about the
big picture and the strategy to make it all work efficiently. It's like the
conductor of an orchestra, making sure every instrument plays in
harmony.
Supply Chain vs. Logistics

Logistics

• Now, think of logistics as one specific piece of the

puzzle. Logistics is like the delivery truck driver who
takes the product from the warehouse to the store or
directly to your doorstep.

• In other words, logistics focuses on the transportation

and storage of goods. It's about getting the product
from one place to another as efficiently as possible.
Logistics is a crucial part of the supply chain, but it's just
one piece of the larger puzzle that SCM manages.
 From where does SC starts?
Supply chain planning (SCP)

Supply Chain Planning (SCP) is a crucial The primary goal of SCP is to ensure
process within supply chain management that that products are available when and
involves the development and execution of where they are needed while
strategies to optimize the flow of goods, minimizing costs and maintaining
information, and finances from the initial the desired service levels.
supplier to the end customer.
SC Processes

1. Planning:
Demand planning: forecasting customer demand and aligning it
with production and inventory strategies.

Supply planning: ensuring the availability of necessary materials

and resources to meet demand.

Production planning: scheduling manufacturing activities to

optimize resource utilization.
Element & Activities of SC PLANNING
i. Demand planning: this involves forecasting customer demand for products or services. It aims to predict how
much of a product will be needed in the future, enabling organizations to plan production, procurement, and
inventory levels accordingly.
ii. Supply planning/source and sourcing: supply planning focuses on ensuring that the necessary materials,
components, and resources are available to meet the forecasted demand. It involves managing production
schedules, procurement activities, and supplier relationships.
iii. Production planning: production planning involves determining the production capacity, scheduling
manufacturing processes, and allocating resources to meet demand efficiently. This includes decisions on
production volumes, batch sizes, and production locations.
iv. Inventory planning: inventory planning aims to strike a balance between carrying too much inventory (which
ties up capital) and carrying too little (which can lead to stockouts). It involves setting optimal inventory levels
and reorder points.
v. Distribution planning: distribution planning focuses on the efficient movement of products from
manufacturing facilities or distribution centers to customers or retailers. This includes route optimization,
transportation scheduling, and warehouse management.
Element & Activities of SC PLANNING
vi. Network Design/mapping: Network design involves optimizing the structure of the supply chain network,
including the number and location of warehouses, distribution centers, and production facilities. It aims to
minimize transportation costs and lead times.
vii. Collaborative Planning/integration: Collaborative planning involves sharing information and collaborating with
suppliers, distributors, and other partners in the supply chain to improve coordination and responsiveness.
viii. Sales and Operations Planning (S&OP): S&OP is a process that aligns demand and supply plans across the
organization. It brings together various functions, such as sales, marketing, finance, and operations, to create a
unified plan.
ix. Risk Management/Resiliency: SCP also involves identifying and mitigating risks that could disrupt the supply
chain, such as supply disruptions, natural disasters, or geopolitical events. This may involve contingency
planning and risk assessment.
x. Technology and Software/Digital transformations: SCP often relies on specialized software and technologies,
such as Enterprise Resource Planning (ERP) systems, Advanced Planning and Scheduling (APS) software, and
Demand Forecasting tools, to support decision-making and automation.
 Sourcing in SCM
Definition: Determine what materials, components, or services need to
be sourced based on the organization's production or service
requirements.

Example: an automobile manufacturer identifies the need to source

steel, rubber, electronics, and various other components for its vehicles.

• Sourcing is a subprocess of procurement and comes before any

purchases are made. And insured the lowest purchase price is found
while developing supply channels that provide the most significant
value. To summarize, sourcing adds value to the procurement cycle
by establishing solid supplier relations that help ensure consistent
quality and availability of products or services.
Sourcing key operations

Supplier identification:
Identify potential suppliers or sources that can meet the sourcing needs.
This may involve market research, industry contacts, or supplier
databases.
Supplier evaluation and selection:
Assess and compare potential suppliers based on criteria such as cost,
quality, reliability, capacity, location, and ethical considerations.
Negotiation and contracting:
Definition: negotiate terms and conditions, including pricing, delivery
schedules, payment terms, quality standards, and any legal agreements
with selected suppliers.
Supplier relationship management (srm):
Develop and maintain strong relationships with selected suppliers to
ensure open communication, collaboration, and continuous improvement
ourcing key operations
Risk assessment and mitigation:
Identify potential risks associated with suppliers, such as supply chain disruptions,
quality issues, or geopolitical factors, and develop strategies to mitigate these risks.
Performance monitoring:
Definition: continuously monitor supplier performance using key performance
indicators (kpis) to ensure they meet agreed-upon standards.
Supplier development:
Invest in the improvement of supplier capabilities, processes, and quality to enhance the
overall value they bring to the supply chain.
Cost management:
Definition: continuously seek opportunities to reduce sourcing costs through
negotiations, process improvements, and economies of scale.
Review and optimization:
Periodically review sourcing strategies and supplier relationships to identify areas for
optimization and improvement.
3. Manufacturing:
Production: transforming raw materials and
components into finished products.
Quality control: ensuring products meet quality
standards through inspections and testing.
Process optimization: continuously improving
manufacturing processes for efficiency.
SC Production/Manufacturing/Making
Product design and development:
The process begins with product design and development, where the organization designs
products or defines service specifications based on market demand and customer
requirements.

Materials planning and procurement:

Determine the materials, components, and raw materials required for production and
procure them from suppliers.

Production scheduling:
Develop a production schedule that outlines when and how much of each product will be
manufactured based on demand forecasts and inventory levels.

Manufacturing process:
Definition: transform raw materials and components into finished products through various
manufacturing processes, such as assembly lines, machining, or chemical reactions.

Quality control and assurance:

Definition: implement quality control processes and measures to ensure that products meet
specified quality standards and safety regulations.
SC Production/Manufacturing/Making
Inventory management:
Definition: manage inventory levels to balance production capacity with demand, minimizing
excess inventory or stockouts.
Maintenance and repairs:
Perform regular maintenance and repairs on production equipment to minimize downtime and
maintain production efficiency.
Lean manufacturing and continuous improvement:
Adopt lean manufacturing principles and continuous improvement practices to optimize
production processes and eliminate waste.
Capacity planning:
Assess and adjust production capacity to meet changing demand patterns and market conditions.
Environmental and sustainability practices:
Incorporate environmentally friendly and sustainable practices into production processes to
minimize environmental impact.
Logistics
Management
•The Logistics process area in the SCOR
model focuses on the physical movement
and distribution of goods within the
supply chain, from manufacturing or
storage to the end customer

•e.g., A global e-commerce company's

logistics operations involve receiving
orders online, picking products from
regional fulfillment centers, and delivering
them to customers' doorsteps
Logistics – key
engagements
1. Transportation Management
2. Warehouse Management
3. Reverse Logistics
4. Information Systems and
Technology
5. Risk Management
6. Cost Optimization
7. Sustainability and Green Logistics
Logistics
operational
activities
•Transportation:
•Mode selection: choosing the most suitable
transportation mode (e.g., Road, rail, air,
sea) for moving goods.
•Routing and scheduling: planning the best
routes and schedules to optimize delivery
efficiency.
•Carrier management: collaborating with
carriers and logistics partners for smooth
transportation.
Logistics operational activities

Warehousing and storage:

Storage: safely housing products at different stages of the
supply chain.
Order picking and packing: preparing orders for
shipment, often with value-added services.
Inventory tracking: maintaining accurate records of
inventory levels and movements.
 Logistics operational activities

Reverse Logistics:
Managing the return of products from customers to the
manufacturer.
Example: A smartphone manufacturer has a process for
refurbishing returned devices and recycling their components.

Information Systems and Technology: Leveraging technology to

improve supply chain processes.
Example: An online grocery store uses a mobile app for customers
to track deliveries in real-time.

Risk Management: Identifying and mitigating risks in the supply

chain.
Example: An automotive manufacturer diversifies its suppliers to
reduce the risk of production disruptions due to a single supplier's
issues.
Logistics operational activities

Cost Optimization: Finding ways to minimize supply chain costs

while maintaining quality.
Example: An airline optimizes its flight schedules to reduce fuel
consumption and operating expenses.

Sustainability and Green Logistics: Focusing on environmentally

friendly supply chain practices.
Example: A clothing retailer sources sustainable materials and uses
eco-friendly packaging to reduce its carbon footprint.
Return/FEEDBACK
Return process associated with reverse logistics, or, in other
words, the return of goods from the customer to the retailer.

1. Warranty and service management: managing

warranty claims, service requests, and repairs for
products that are returned due to defects or issues.
2. Customer communication: communicating with
customers regarding their returns, including return
policies, return status, and refund or replacement
processes.
3. Analysis and improvement: analyzing return data to
identify trends, root causes of returns, and opportunities
for process improvement. This analysis can help reduce
return rates and improve customer satisfaction.
SCOR-
Model
NIKE’S SUPPLY CHAIN Streams
THANKYOU

Q&A