PRINCIPLES OF LOGISTICS AND

SUPPLY CHAIN MANAGEMENT

(BUSS 2054)

Dr Sev Nagalingam

SCHOOL OF MANAGEMENT
MARKING SCHEME - 2016

Assignments: 50 %
Assignment 1- continuous 15% (Two parts)
Assignment 2- Formal Report- 35%

Exam: 50%

= 100%
BUSS 2054
OBJECTIVES

What are your

objectives on studying
this course??

BUSS 2054
OBJECTIVES
The aim of this course is to provide students with
fundamental concepts and latest development in L&SCM.
On completion of this course, you should be able to:
1) Identify, analyse and describe key components of
logistics activities;
2) Describe and evaluate the roles of logistics
management in supply chain and operations
management;
3) Discuss and apply essential trade-offs in meeting
organisational performance goals while minimising total
costs; and
4) Explain and review the role of logistics management in
adding value to operations management.

BUSS 2054
7 GRADUATE QUALITIES - A GRADUATE OF THE
UNIVERSITY OF SOUTH AUSTRALIA:

1. Operates effectively with and upon a body of knowledge of sufficient

depth to begin professional practice
2. Is prepared for life-long learning in pursuit of personal development
and excellence in professional practice
3. Is an effective problem solver, capable of applying logical, critical, and
creative thinking to a range of problems
4. Can work both autonomously and collaboratively as a professional
5. Is committed to ethical action and social responsibility as a
professional and citizen
6. Communicates effectively in professional practice and as a member of
the community
7. Demonstrates international perspectives as a professional and as a
citizen.
COURSE QUALITIESMAJOR

To provide a body of knowledge of sufficient

depth to begin professional practice in L&SCM
To enable to be an effective problem solver,
capable of applying logical, critical, and creative
thinking to a range of problems
To prepare to work both autonomously and
collaboratively as a student
To appreciate the life-long learning in pursuit of
personal development and excellence in
professional practice
To be aware of ethical action and social
responsibility as a professional and citizen

BUSS 2054
GENERAL NOTES
Switch off your mobiles
Do not disturb class by cross
talking
Ask questions to clarify issues
Share your experiences and
learning outcomes
Be courteous to other
students and staff and when
posting messages on the
forum.BUSS 2054
BUSS 2054

Principles of Logistics and

Supply Chain Management
(Topic 1) 8
Topic 1 Overview of Logistics

Reading:
Murphy, Jnr, PR, & Knemeyer, AM
2015 Contemporary Logistics, 11th
edition, Pearson Prentice Hall, NJ,
USA , Chapter 1.

Supplementary reading Course

web
BUSS 2054 9 9
Topic 1 Overview of Logistics
In this topic you should be able to
understand:
Economic impact of logistics
Reasons for the increased importance of
logistics in organisations
Systems and total cost approaches to
logistics
Logistics relationships within the organisation
Marketing channels
Activities in the logistics channel
BUSS 2054 10 10
Where does logistics fit
Supply Chain Management For A Better World
in?(YouTube 3:31

Management

HR Strategic Managing
Managing Finances
Management Planning Operations

Quality
Design of Goods/ Logistics &
Business Management,
Services, Facilities Supply Chain
Operations layout Maintenance
Management
etc.

Managing Integrated Sustainable

Services SCM (BUSS 3027) LSCM (BUSS 3085)

BUSS 2054 11 11
WHAT IS LOGISTICS
Logistics (Australian Oxford dictionary, 2004)
The organisation of moving, lodging, and supplying troops and equipment.
The detailed organisation and implementation of a plan or operation.

What is Logistics & Supply Chain (2m:48 s)

12
Perspective
about 25 to 30 years ago merchandising was
largely paper-based
Typical response time - 4 to 6 weeks.
Accumulation of inventory by manufacturers.
World War II (1939-1945) -
Post-WWII - productivity and brand loyalty
Late 1990s, brand loyalty - increasingly
irrelevant.

EIS
R
BUSS 2054 13 13
Increased importance of Logistics
Management (since 1980s)
A Reduction in Economic Regulation - De-
regulation
Changes in Consumer Behaviour - Recognition of the
role of logistics
Technological Advances - Innovations in ICT
The Growing Power of Retailers-
Differentiation and Recognition-
Globalisation of Trade -
Sustainability awareness and emerging regulations

14
BUSS
 Perspective
Today, - rapid response.
Over-production, excessive inventory, incomplete or delayed deliveries
and lengthy waiting times for delivery of goods and services no
longer tolerated.
Organisations need efficient and effective
logistics management.

EIS
R
BUSS 2054 15 15
Economic Importance of
Logistics
While logistics is essential in enabling
organisations to achieve their strategic
direction, it is also critical to national
economic performance:
Many countries depends on logistics for its
economic survival
China - centre for low-cost manufacturing
Australia - sophisticated logistics system to
conquer its tyranny of distance
inability of African nations to compete globally -
Japan, Germany and USA compete effectively-
successful logistics systems .

EIS
R
BUSS 2054 16 16
 TABLE 1-1: THE COST OF THE BUSINESS LOGISTICS SYSTEM IN
RELATION TO A COUNTRYS GROSS DOMESTIC PRODUCT (GDP)

Australia: 8.6
(in 2013)

Copyright 2015 Pearson 1-17

Education, Inc.
 Utility Creation in the Economy
Macroeconomic
Impacts
Economic Utility
Possession utility
Form utility
Place utility
Time utility

EISR
18
Logistics Defined
Council
Council of
ofSupply
SupplyChain
Chain
Management
ManagementProfessionals
Professionals
(CSCMP):
(CSCMP):
Logistics
Logisticsmanagement
management is is
that part
that of
part
the supply
of the chain
supply management
chain management that
plans, implements,
that plans, and controls
implements, the
and controls
efficient, effective
the efficient, forward
effective and reverse
forward and
flow and flow
reverse storage
andofstorage
goods, services,
of goods,and
services,
related and related
information information
between the point
between
of origin andthethe
point of of
point origin and the
consumption
point
in ofto
order consumption in order to
meet customers
meet customers requirements.
requirements.
EIS
R
Source: http://cscmp.org/

BUSS 2054 19 19
Logistics
Logistics also delivers services.
In some manufacturing
organisations, materials are
obvious.
In services materials are less
obvious intangibles, e.g. loans, medical
treatment and thrill rides.

Tailored logistics Vs Mass

logistics

BUSS 2054 20 20
Streams of Logistics?

Military logistics

Business logistics
Event logistics

Service logistics

Humanitarian logistics
EIS
R
21
The 7 Rights of Customer
Service
The aim always is to
achieve:
1. The right product and/or
service;
2. At the right time;
3. In the right quantity;
4. At the right place;
5. In the right condition;
6. At the right price;
7. With the right after-sales
service.
BUSS 2054 22
A View of Logistics Management

23
Systems Approach
Interdependence of company and
logistics goals and objectives
Interdependence of major functional
areas of a company

Interdependence of logistics activities

Logistics activities - inevitably
integrated.
To be managed as an integrated
system.
EISR BUSS 2054
24
Logistics in The Firm: The Micro
Dimension
Logistics interfaces with
manufacturing and/ or operations
Logistics Interfaces with marketing
(4Ps)
Price
Product
Promotion
Place
EISR

25
 Control Over Inbound & Outbound Movement
Supplier facing Customer facing
Suppliers

BUSS 2054 26
26
 The Systems and Total Cost
Approaches to Logistics
Individual logistics activities -
traditionally separate cost centres.

Total Cost Approach- coordinates all

logistics activities and recognises the essential
trade-offs.
Cost trade-offs: -

Total Logistics Concept: integration of all activities

into a unified whole-

EIS
R
Copyright 2015 Pearson 1-27
Education, Inc.
Cost Trade-offs in Logistics
Logistics exists to move
and position inventory
Inventory has little value
unless it meets 7 Rs
If an organisation does
not meet these
requirements it will have
nothing or not enough to
sell or provide

Source:
Grant et al
2006

BUSS 2054
28
 Logistical Relationships within the Firm

Marketing

Finance/ (accounting) 3 major

function
s
Production/
Operations

Copyright 2015 Pearson 1-29

Education, Inc.
 Logistical Relationships within the Firm

Marketing Finance
Place Decisions Inventory
Price Decisions Quantity
Landed costs
Time- order fulfilment
Product Decisions
Product Decisions Stockouts
Stockouts Sustainable products

Sustainable Promotion Decisions

products
Promotion
Decisions
Copyright 2015 Pearson 1-30
Education, Inc.
Logistics in the Firm: Factors
Affecting the Cost and Importance of
Logistics
Competitive relationships- via
differentiation
Order cycle
Sustainability
Inventory effect
Transportation effect
Product relationships
Dollar value
Density
Special handling & susceptibility to damage
Spatial relationships
31
MARKETING CHANNELS
set of institutions necessary to transfer the
title to goods and to move goods from the point
of production to the point of consumption and,
as such, which consists of all the institutions
and all the marketing activities in the marketing
process.
Source: American Marketing Association Dictionary, www.marketingpower.com

Channel members
Manufacturers

Wholesalers EISR

Retailers
Pearson Education, Inc. 1-32
MARKETING CHANNELS
Ownership channel
Negotiations channel

Financing channel

Promotions channel

Logistics channel
EISR

Pearson Education, Inc. 1-33

CHANNEL INTERMEDIARIES/
FACILITATORS
Ownership channel
Banks, finance companies
Negotiations channel
Brokers
Financing channel
Banks, insurance companies, finance companies
Promotions channel
Advertising agencies, public relations agencies
Logistics channel
?

Pearson Education, Inc. publishing as Prentice Hall 1-34

Logistics System
Outputs
The supply chain and logistics system must be able
to satisfy the needs and requirements of customers
(not just ultimate consumers) by overcoming :

Discrepancy in space;

Discrepancy in time; and

Discrepancy in quantity and assortment

(range).

EISR

BUSS 2054 35 35
Functions of the Logistics Channel
In order to successfully address these
discrepancies logistics management
performs four key functions:
Sorting re-configure freight (consignments).
This is performed through cross-docking, mixing and
assembly.
Accumulating bringing together inventory
Allocating breaking bulk
Assorting building up assortments of
goods/services

All these are value-added activities.

EISR
BUSS 2054 36
ACTIVITIES IN THE LOGISTICAL
CHANNEL
Customer service Demand
Facility location forecasting
decisions International
Inventory logistics
management Materials handling
Order management Packaging
Procurement Reverse logistics
Transportation Warehousing
management management

BUSS 2054 Pearson Education 1-37

Material & Information Flows-
can you identify marketing channels?

MATERIALS MANAGEMENT PHYSICAL DISTRIBUTION MANAGEMENT

Transit
Depot
Raw
materials INVENTORIES
Sub-
Work Finished Finished
assemblies in Products Products Customer
Progress /
Proprietary End User
(Factory (Field
items Warehouse)Warehouses)
Manufactured
parts
Production
Packaging
Materials Flows Intermediary
materials
Information Flows

LOGISTICS

BUSS 2054 38
 A Simple Logistics Channel

Source: Coyle et al. 2009

39
Economic / Profit impact of Logistics
- Cost Savings
A $1 increase in sales does not result in a $1
increase in profit.
Gross profit = revenue cost of goods sold
Net profit = gross profit expenses (before tax).
But, a $1 reduction in logistics costs
(expenses) will result in a $1 increase in
profits, through:
o Reduction in transportation costs
o Eliminating waste and duplication of effort
o Reducing inventory EISR
o Reducing rework, returns and warranty repairs

BUSS 2054 40
Components of Logistics
Management
Management Actions
Inputs into Outputs of
Logistics
Planning Implementation Control Logistics
Natural Marketing
resources - orientation -
land, facilities Suppliers Logistics Management competitive
equipment advantage
Raw In-process Finished
Human materials inventory goods
Time &
resources place utility
Vendors
Financial Efficient
resources movement to
Logistics Activities
Information customer
resources Customer service
Plant & warehouse site Proprietary
Demand forecasting
selection asset
Production planning/
Procurement
Scheduling Industrial Packaging
Logistics communications
Reverse logistics
Inventory control
Traffic & Transportation
Material handling
management
Order fulfillment
Warehousing & Storage
Parts & service support

BUSS 2054 41
RESPONSIBILITIES OF LOGISTICS
MANAGERS
A generalist
Understands
A specialist
functional
Freight rates
relationships
Warehouse
Relates logistics to
other firm layouts
Inventory
operations,
suppliers, customers analysis
Controls large Production

expenditures Purchasing
Transportation
BUSS 2054 1-42
Conclusion
Logistics is the management of the flows
of materials, information and cash to position inventory
throughout the supply chain.
Logistics is a subset of and occurs within
the supply chain network.
Logistics creates value by positioning
inventory at the right time and in the right
place.

BUSS 2054 43 43
Summary
In this topic we sought to:
Discuss the economic impact of logistics
Define logistics and logistics management
Discuss the reasons for the increased importance of
logistics in organisations
Discuss the systems and total-cost approaches to
logistics
Understand the logistics relationships within the
organisation
Discuss marketing channels
Describe the activities in the logistics channel
In the next class we will review Topic 2 Logistics and
Information Technology
BUSS 2054 44 44
QUESTIONS?

Thank You

45
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