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Supply Chain Management & Logistics

This document provides an introduction to supply chain management and logistics. It discusses how supply chains compete rather than individual companies. It also notes that a supply chain is only as strong as its weakest link. The document outlines how logistics and effective supply chain management can provide competitive advantage by differentiating companies and reducing costs. It discusses the challenges of shortening product life cycles, customer demands for lower inventories, and unstable markets. Finally, it emphasizes the importance of customer service and developing key performance indicators to measure service levels.

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Lama Ali
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46 views30 pages

Supply Chain Management & Logistics

This document provides an introduction to supply chain management and logistics. It discusses how supply chains compete rather than individual companies. It also notes that a supply chain is only as strong as its weakest link. The document outlines how logistics and effective supply chain management can provide competitive advantage by differentiating companies and reducing costs. It discusses the challenges of shortening product life cycles, customer demands for lower inventories, and unstable markets. Finally, it emphasizes the importance of customer service and developing key performance indicators to measure service levels.

Uploaded by

Lama Ali
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Introduction

to Supply
Chain
Management
and Logistics

Dr Ahmed Maher
Slides by: Dr Witold Bahr
([email protected])
Logistics, supply chains and competitive advantage

2
Supply Chain Management
• “Nowadays it is supply chains that compete not companies”
(Christopher, 1998)

Dr Martin Christopher
Emeritus Professor

• “A supply chain is as strong as its weakest link”

Supply chain x Supply chain y

3
Competitive advantage
• Securing and sustaining superiority over competitors.

4
Logistics and competitive advantage
2

5
The challenge to logistics and supply chain
management

“seek out strategies


that will take the
business away from
the ‘commodity’ end
of the market towards
a securer position of
strength based upon
differentiation and
cost advantage”

6
Gaining competitive advantage

7
The value chain 1 2

• Competitive advantage cannot be


understood by looking at a firm as a
whole. It stems from the many
discrete activities a firm performs
in designing, producing, marketing,
delivering, and supporting its
product. each of these activities can
contribute to a firm’s relative cost
position and create a basis for
differentiation … The value chain
disaggregates a firm into its
strategically relevant activities in
order to understand the behaviour
of costs and the existing and
potential sources of differentiation.
A firm gains competitive advantage
by performing these strategically
important activities more cheaply
or better than its competitors

Source: Porter, M.E., competitive Advantage, The Free Press, 1985

8
The competition in value
1. Shrinking Product life cycles
2. Customers’ pressures for lower inventories
3. Unstable/dynamicmarkets…difficult to rely on forecasts

9
Product
life
cycles
10
Shortening
product life
cycles
consequences

11
Customer’s drive for reduced inventories

Agility

The Item Fill Rate (IFR)

12
Unstable/volatile markets

13
Customer service

14
LT1SCM
Customer service

• It is no longer enough to satisfy customers. You


must delight them (Philip Kotler)
• Customer is not King…customer is God
(Konoshuke Matsushita)

►Price ►Image ►Availability

16
Gaps in customer service

Source: Parasuraman et al., 1991, in Harisson & Van Hoek, 2010

17
Elements of KPI’s of
KPI = key customer service
performance
indicators
Elements of KPI’s of customer service
(examples)

Source: Martin Christopher

19
Key issues in selecting KPI’s
• Specific
• Measureable
• Feasible
• Aligned with company’s strategy and goals
• Take competition into account
• Benchmarking

20
Cost trade-offs required in logistics and
marketing

Sources: Grant, et al. “Fundamentals of Logistics Management” 2006

21
Logistics and customer service influence on
marketing

22
Increasing customer value through logistics

23
Customer service and customer retention

• Nowadays it is more about building relationships with clients so as to:


• retain them and
• create loyal customers

• A loyal customer is more profitable

24
Customer Lifetime Value (CLTV)
• CLTV = Average Transaction Value *
Annual Purchases (frequency) *
Expected Customer ‘Lifetime’

25
The cost of serving the customer

• The 80/20 Pareto-rule will often be found


to hold: 80 per cent of the profits of the
business come from 20 per cent of the
customers.

26
How to shift the cost
of service?
27
Setting priorities in customer
service: “Pareto” or 80/20 rule

28
Managing customer service levels strategies

29
Thank you!

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