Supply Chain Management

Supply chain management (SCM) is the centralized

management of the flow of goods and services to and
from a company and includes all of the processes
involved in transforming raw materials and
components into final products.
 Supply Chain Management
• Supply chain management deals with a system of
procurement, operations management, logistics and
marketing channels, through which raw materials can be
developed into finished products and delivered to their
end customers.
• Supply chain management is the overseeing of the flow
of goods and services from raw materials to final
products. It includes all the processes involved in
getting products to customers, such as shipping. As the
global economy recovers, demand and supply continue
to be at odds with each other.
 Concept Of Logistics
Logistics refers to the overall process of managing how
resources are acquired, stored, and transported to their
final destination. Logistics management involves
identifying prospective distributors and suppliers and
determining their effectiveness and accessibility. Logistics
managers are referred to as logisticians.
 Objectives Of Logistics Management
1. Improve Supply Chain Efficiency: - Logistics management leads to
greater visibility into the supply chain and fastens the inbound and
outbound activities. It is extremely beneficial to reduce the overhead
cost and allow delivery processes within the stipulated time. Managing
inventory, storage functionalities, and optimizing warehouse operations
can significantly enable businesses to better control costs and increase
the overall efficiency of operations.
2. Inventory Management: - Managing the inventory is an integral part
of the smooth running of businesses. Identifying which and how much
stock to order is useful to maintain the inventory levels and satisfy the
end customers. Therefore, inventory management tends to limit the risk
of stockouts. Also, decreasing inventory levels efficiently eliminates
unnecessary costs and improves SCM operations.
 Objectives Of Logistics Management
3. Fulfill customer requirements: - The main objective of logistics
management is to execute proper planning on transportation modes and
inventory available to satisfy the customers. This leads to a smooth
freight moving process and timely delivery of products or goods.
Logistics management allows customers to stay informed and enhances
the overall experience by providing them with relevant information.
Analyzing the customer’s wants is the best way to build the synergic
relationship and brand reputation of an organization.
4. Mitigate product damage: - It is an additional cost to logistical expenses
which can be caused due to improper logistical handling, absence of load
unitizing, incorrectly designed packaging, etc. An efficient logistics
management strategy is needed to enable minimum product damage.
Therefore, proper monitoring of all product movements is essential to
fulfilling the objectives of logistics management.
 Objectives Of Logistics Management
5. Reduce Operational Cost: - Embracing logistics management is the best way
to drive up revenue and reduce the overall cost of the supply chain operations.
It allows optimum utilization of raw materials and faster delivery of products
which help companies to gain a competitive advantage. However, streamlining
a complex network of operations and management of goods is useful in
minimizing the logistics cost. Controlling and managing the supply chain
ecosystem with intelligent route planning can also enhance business
productivity.
6. Quick Response: - The main objective of logistics management is customer
satisfaction. Solving the customer query and issues in the shortest time frame
is an effective way to enhance the logistics strategy. Therefore, it plays a
crucial role in accomplishing timely delivery. Companies tend to operate
reactively to each order as logistics management provides them with relevant
information to intensify decision-making capability. This leads to rapid
response and accuracy in the operation process.
 Objectives Of Logistics Management
7. Optimize delivery performance: - Providing on-time delivery to the
customers is extremely important as it helps to build long-term
relationships with them. Consistency in delivery performance through
proper planning and implementation can save a lot of time and resources.
Companies get insights into the real-time updates and the exact location of
the delivery vehicles. Getting control and visibility of the delivery
processes is viable logistics strategy to meet customer expectations better.
8. Efficient Flow of Information: - The integral part of logistics
management is to strengthen the communication flow of internal business
functions and external partners. Maintaining a clear communication
network allows businesses to become agile and more responsive. One of
the major objectives of logistics management is to facilitate collaboration.
Therefore, establishing a seamless communication flow helps the
companies to coordinate with vendors, suppliers, and customers.
 Objectives Of Logistics Management
9. Quality Assurance: - The quality should be maintained throughout all
facets of the logistics industry. Companies should take thoughtful
efforts and always perform activities out of a supervisor’s vision.
Monitoring the quality of overall logistics operations by utilizing new-
age technologies can improve business growth. Quality assurance is
considered to be one of the major aspects of the objectives of logistics
management.
10. Reduce Carbon Footprint: - A reliable logistic system tends to
introduce new-age technologies for reducing carbon emissions.
Undoubtedly, the transportation industry is considered to be the major
reason for creating a negative impact on the environment as vehicles
emit polluting gases. The objective of logistics management is to take
measures for optimizing routes, automation in workflow, and so on
which help in setting a benchmark in green and sustainable logistics.
Types Of Logistics
 Types Of Logistics
1. Inbound Logistics: - Inbound logistics is used to
execute strategic organizational tasks for working
upstream. Under this inbound logistics, the
movement, transportation and storage solutions of
various information and product from the suppliers
is passed onto the warehouse and then is
transferred to the production facilities for further
processing & production. Inbound logistics is all
about the transportation between the companies
and their suppliers.
 Types Of Logistics
2. Outbound Logistics: - Outbound logistics is the
movement of products or finished goods from the
production centers to the next supply chain link. After that,
these products are moved from the warehouse to the
consumption point or the customers. Hence, outbound
logistics is also known as the process of order fulfillment.
All the products that are shipped under outbound logistics are
meant for end-users, moving through this process flow. The
inbound logistics is used to help the raw materials reach
out to the manufacturer, and the processed product is then
transported to the end-users through outbound logistics.
 Types Of Logistics
3. Reverse Logistics: - As the name suggests,
Reverse Logistics is the transportation of
goods or products from the end-users to the
supply chain. Reverse logistics is needed in
the event of a replacement or return of
products for refurbishing, repairing, exchange,
disposal, or recycling.
 Types Of Logistics
4. Third Party Logistics (3PL Logistics): -
Third-party logistics (or 3PL) is known as
outsourcing operational or eCommerce
logistics to a third party logics company who
then handles everything from inventory
management to delivery of the products. This
enables business owners to focus on their
business while the order fulfillment operations
are handled smoothly by a 3PL provider.
 Types Of Logistics
5. Fourth Party Logistics (4PL): - 4PL or fourth-
party logistics is used by companies to outsource
all of their logistics operations to a single logistics
partner. The logistics provider would be
responsible for managing the entire supply chain
including assessing, designing, building, running
and tracking supply chain solutions for the client.
This is why a 4PL logistics partner represents a
higher level of supply chain management for the
client.
 Concept/Functions Of Logistics
Management
a) Information flow: This is needed to order, check, process, and coordinate.
b) Warehousing: Material storage, load unitising and material handling, size
selection and network planning, order picking and filling, and dispatch
documentation.
c) Inventory control: Material requirement planning and inventory level
decisions for customer service objectives.
d) Packaging: For handling and damage prevention, communication, and
intermodal transportation.
e) Transportation: Route planning, mode selection and vehicle scheduling.
The concept of logistics is based on a total systemic view of the multitude of
functions in movement of materials and goods from sources of supply to
users. It entails management to think in terms of managing the total
system; rather than just one part of it.
Evolution Of Logistics Management
Logistics Management in its Early Stages
Focusing on transportation and storage was a defining feature of logistics management's early stages. With
little thought given to other aspects of the supply chain, the main objective was to move goods from one
location to another as quickly and efficiently as possible.
However, as industries become more globalised and complex, new problems appear that necessitate a more
comprehensive approach to logistics management. Here are some examples of logistics management's
initial phases:
1. Military logistics in ancient times: - Military operations, where the effective movement of personnel,
equipment, and supplies was essential to battles and campaigns, are the origin of logistics management.
Military logistics can be traced to ancient Persia, where Cyrus the Great set up a network of supply points
and transportation routes to support his armies. This is the first documented example of military logistics.
2. The Industrial Revolution and its impact on logistics management: - Significant modifications to
logistics management were brought about by the industrial revolution in the 18th and 19th centuries.
Businesses now have new opportunities to move goods over long distances swiftly and effectively thanks
to the development of steam power, railroads, and mass production methods. As a result, businesses started
upgrading their storage and transportation systems to satisfy consumers' rising expectations.
3. Development of transportation systems and logistics infrastructure: - Transport and logistics
infrastructure made significant strides in the 20th century. The development of trucking, air cargo, and
container shipping revolutionised the movement of goods. This made it simpler and more affordable to
move goods across international boundaries and continents. Building warehouses, distribution centres, and
other logistics facilities contributed to supply chain effectiveness improvement by cutting lead times and
inventory costs.
Evolution Of Logistics Management
Modern Logistics Management
A more integrated and team-based approach to supply chain management is the hallmark of modern logistics.
While globalization has created new challenges that call for a more sophisticated approach to logistics
management, technology has played a significant role in improving logistics efficiency and effectiveness.
The following are significant events that have affected modern logistics management:
1. Emergence of supply chain management: - The term "supply chain management" first appeared in the 1980s
and 1990s as a more comprehensive method of managing logistics. From locating raw materials to delivering
finished goods to customers, supply chain management includes the coordination and optimization of every
activity involved in the creation and delivery of goods and services. For this strategy to succeed, suppliers,
manufacturers, distributors, and retailers will all need to work together and communicate more effectively.
2. Adoption of technology in logistics management: - Recent years have seen a significant change in logistics
management due to technology adoption. The effectiveness and precision of logistics operations have
increased with the use of cutting-edge software systems for inventory control, warehouse management, and
transportation management. Monitoring real-time supply chain activities is also possible via real-time
tracking and monitoring systems, improving visibility and control.
3. Globalization and its impact on logistics management: - As businesses become more globalised, logistics
management faces new challenges. A more sophisticated approach to logistics management is necessary to
manage complex supply chains across numerous nations and regions. When managing global supply chains,
businesses must consider elements such as customs laws, international trade agreements, and cultural
variances.
Evolution Of Logistics Management
Current Trends in Logistics Management
Today's trends in logistics management are centered on adapting to consumers' changing needs,
enhancing sustainability, and utilizing technology to optimize logistics processes. Current logistics
management trends include:
1. E-commerce and last-mile delivery: - Since more consumers choose to shop online and have their
purchases delivered to their doorsteps, e-commerce has had a significant impact on logistics
management. This has caused more emphasis on last-mile delivery, which is the last phase of the
delivery process from the warehouse or distribution centre to the customer's location. In response to
e-commerce demands, companies are exploring a variety of delivery options, including drones,
autonomous vehicles, and crowd sourced delivery services.
2. Sustainability and green logistics: - A growing emphasis on sustainability in logistics management
is a result of public awareness of environmental issues. Companies are looking at ways to reduce
waste throughout the supply chain and cut back on their carbon footprint. This entails using eco-
friendly transportation methods, such as electric vehicles, enhancing delivery routes to save on fuel,
and putting sustainable packaging strategies into practice.
3. Big data analytics and predictive modeling: - Big data analytics and predictive modeling in logistics
management have grown in significance. With these technologies, businesses can analyze enormous
amounts of data to find trends and patterns, improving decision-making and logistics operations.
Businesses can also forecast future demand with predictive modeling, which can then be used to
modify their supply chain.
 Challenges in Logistics Management
Managing logistics involves a number of difficulties that require businesses to be flexible and agile.
Businesses must overcome the following obstacles to succeed in today's cutthroat business
environment:
1. Global Supply Chain Disruptions: - Global supply chains interrupted by calamities, unstable
governments, and pandemics are one of the biggest problems facing logistics management today.
These interruptions may result in material shortages, shipping delays, and higher transportation costs.
This could have a big effect on both businesses and customers.
2. Labour Shortages and Workforce Management: - Logistics management must also deal with the
lack of skilled labour, especially in the trucking industry. This could lead to higher salaries and more
competition for workers, which would raise company costs. Management of a diverse workforce of
full-time employees, part-time employees, and contractors is becoming harder for businesses.
3. Regulatory Compliance: - Logistics management is governed by local, national, and international
laws. Businesses must stay informed and ensure compliance because these laws can be complicated
and change frequently. Regulation violations may result in penalties, legal action, and reputational
harm to a company.
4. Environmental Sustainability: - Businesses are under pressure to adopt more sustainable practices as
consumers' awareness of logistics' environmental impact grows. This may entail spending money on
eco-friendly transportation options, planning delivery routes more efficiently, and using eco-friendly
packaging materials. However, putting these practices in place can be expensive and time-consuming.
Additionally, suppliers and customers unwilling to pay more for sustainable products may oppose
businesses.
Difference Between Logistics & Supply
Chain Management
 What is 3 Party Logistics?
rd

In simple terms, a 3PL will offer a variety of

logistics services such as freight transportation,
order fulfillment, and warehousing to product
companies who need to ship, store, and transport
goods. In other words, a 3PL acts as a middleman
between your business and the carriers that
deliver your products to customers. Most 3PLs
manage or own their own facilities where the
seller’s inventory is stored and fulfilled.
 What is 4 Party Logistics?
th

A 4PL provider is an integrator that manages all

aspects of the supply chain. Going beyond
physical logistics, a 4PL may include elements
of IT, procurement, and finance. A 4PL may
outsource the management of physical goods
to one or several 3PLs.
 Comparison Between 3rd Part and 4th Party
Logistics
1. Core Competencies and Focus: - A 3PL provider focuses on the
day-to-day operations of your supply chain logistics while a 4PL
focuses on optimizing your entire supply chain. Consequently, a
4PL takes over the entire operation and allows you time to grow
and expand your business. A 4PL also acts as the sole point of
contact in your supply chain, but a 3PL only takes care of certain
aspects of the supply chain.
2. Vendor Relationship: - The way you interact with a 3PL provider
is usually transactional. The relationship is often more about lane
costs rather than strategic elements. On the other hand, a 4PL
provider relationship will be more about long-term strategy. A 4PL
provider will likely help you to organize, lead, design, and
coordinate your supply chain.
 Comparison Between 3rd Part and 4th Party
Logistics
3. Systems and Assets: - 3PL providers often own many or all the
necessary assets you need to run your supply chain including trucks,
distribution centers, and warehouses. In contrast, 4PLs are normally
non-asset based—they may own IT systems and intellectual capital,
and mainly provide logistics expertise. They also focus on finding the
best suppliers and vendors for your business at a reduced cost.
4. Costs and Overhead: - Most 3PLs have many industry partners and
connections to resources—such as shared warehousing— which can
help reduce logistics costs and boost efficiency. Conversely, a 4PL is
focused on reducing the entire operational cost of your supply chain
while improving performance. A 4PL provider helps you cut costs in
various ways through bundling of services such as lean
manufacturing, reverse logistics, and optimization of procurement
practices.
Comparison Between 3rd Party and 4th Party
Logistics
1. 3 PLs offer a la carte services that can be customized to meet your
needs, whereas 4PLs offer an end-to-end solution that integrates
multiple service providers into a single network.
2. While 3PLs focus on the execution of logistics services, 4PLs focus
on the strategic management of the supply chain.
3. 3PLs are more transactional in nature, whereas 4PLs take on a more
consultative approach.
4. 3PLs usually own warehouse and/or transportation assets, and 4PLs
usually don't own assets and outsource to 3PLs.
5. A 3PL is just a link in the supply chain, whereas a 4PL is the single
point of contact in the supply chain.
6. With a 3PL you have more control over the shipping process and a
4PL takes complete control over it.
 Logistics Mix/Elements
The five elements of logistics include storage handling, packing, inventory,
delivery, and information handling. Efficient handling of warehousing is
vital for your business. Hence, all the elements require maximum attention.
Five aspects of logistics are discussed below:
1. Storage Handling: - Storage handling has taken the spotlight. In
elements of logistics, efficient storage handling counts a lot. One should
have a proper system of storage management. All the logistics should be
taken care of by the administration. Sound warehousing is important for
all the manufactured and raw goods.
2. Packaging: - Then comes packaging. After you are done with gathering
all the goods under one roof, then move towards packaging. Pack your
goods with great care to avoid any breakage in the transportation journey.
Moving from one place to another, you realize that the goods are very
delicate, and a slight break sometimes leads to the spoilage of the goods.
 Logistics Mix/Elements
3. Inventory: - Now comes inventory. Inventory management has great
importance in logistics. When it comes to the movement of goods from
one place to another, you also see the stock. The inventory contains all the
necessary products for the manufacturing of new products. The store deals
with all the manufactured and raw goods that a country has in its
possession.
4. Delivery: - Then comes delivery or transportation. Transportation has
great significance when it comes to logistics. Logistics is majorly all about
transportation. Efficient delivery of products from one place to another is
necessary to smoothly maintain the supply chain system. Delivery should
always be handled with punctuality.
5. Information: - Control always comes with pertinent information. If a user
has less information, there are high chances of inconveniences. Hence, the
logistics team should have proper knowledge about the carrier and shipper
to maintain an efficient system and avoid inconvenience.
END