Definition
A firm’s Supply chain consists of all processes and
activities that are necessary to bring products to market.
It includes
procurement to acquire raw material;
manufacturing to convert raw materials into
components and final products; and
distribution to respond to market demand
• SCM is a set of approaches to manage the SC, i.e.,
• to efficiently integrate suppliers, manufacturers, warehouses, and
stores, so that merchandise is produced and distributed at the right
quantity, to the right location, and at the right time.
• “Efficiently means “minimizing” the system-wide cost while satisfying
service level requirement, or maximizing the total profit.
Suppliers/vendors, service
providers – 3PL, …Production/planning, MPC,
…
Channels, wholesale, service
providers …
A process overview: manufacturing
SCM activities and main business processes
(Source: Ernst and Young Consulting)
Example 1: Park’n Shop
Customers Request:
Buying detergent,
towels, heaters, …...
Park’n Shop
Stores
Park’n Shop
or third-
party
distribution
centers
Procter & Gamble (Thail.)
Plastic ProducerYarn Producer
Da-Fa Textile, Inc. (China)
Philico Factory (Malaysia)
Electronics Components Producer
Chemical Producers Color suppliers
Package Producer
Metal Processors
Supply Chain ExamplesSupply Chain Examples
Consumer
Retailer
Mfg.
Mat'l Flow
VISA®
Credit Flow
Supplier
Supplier Wholesaler
Retailer
CashFlow
OrderFlow
Schedules
Information
After sales support
Warehouse
Demand-Supply Web
Pietra Rivoli holds up the Fort Lauderdale t-shirt
that guided her journey.
Can T-shirt
manufacturers
survive in
Africa?
Four Components of SC
Materials flows (inventory)
Transportation
Facilities
Information flows
Cash flows
Looking at these flows -- logistics
Logistics Management and Supply Chain
Management: what are the differences?
• They are ALMOST the SAME THING!
• … but,
– Supply chain include Logistics - containing high level activities
– SCM emphasis more on relationship, and is used more often
when talking to customers and other partners on the
chain/channel, e.g., cost/profit-sharing, choosing suppliers,
coordinating channel…
– Logistics Management focuses more on Materials Flow execution
• Moving, storing, …
– We have a logistics industry but no SCM industry
However, “logistics” people are switching to call
themselves SCM professionals
Logistics Management and Supply Chain
Management: what are the differences?
… often they overlap
SCM activities actually are logistics
activities
Because, interactions between companies
– partners thru 3 flows - two of them are
logistical nature
Course Plan (tentative) Course Plan (tentative)
Session (Date) Process analysis
1 (7/9) Intro., Push & Pull Processes, Demand Forecasting: Chapters 1/7
2 (14/9) Demand Forecasting (continued) and Intro to MRP/DRP: Chapter 7
3 (21/9) Intro. To Inventory Management: Chapter 9
4 (28/9) Managing Uncertainty in SC + : Chapter 11
5(5/10) Design Supply Chains for Short Life Cycle Products: Chapter 12
6 (12/10) Midterm Exam. (90 min) +
7 (19/10) Determining the Optimal Level of Stock: Chapter 12
8 (2/11) Managing risk in operations & Postponement. Chapters 11/12
9 (9/11) Beer Game +
10 (16/11) Supply Chain Coordination/Integration: Chapter 17
11 (23/11) Supply chain coordination: contracts
12 (30/11) Transportation in a SC & Revenue Management: Chapters 13/15
13(7/12) Supply Chain Strategies and Network Design: Chapters 2/3/5
14 (14/12) Final Exam. (open-book/notes)
(Time allowed, green SC will be discussed)
Course Plan Course Plan
How about ECT 7030 Logistics Mgmt ?
Syllabus for ECT7030 Logistics Management (-- stolen )
1. Introduction to Logistics Management
2. Global Logistics Network Design Issues
3. Transportation Strategy
4. Linear Optimization Review
5. Transportation Planning
6. Facility Location
7. Distribution Network Design
8. Warehouse Layout and Material Handling
9. Plant Visit to Hong Kong International Terminal
10. Global Logistics
11. Benchmarking a Supply Chain
12. Quick Response Logistics, Reverse Logistics, Third-party Logistics
Course Objectives
Introduce the SCM vocabulary
Understand major qualitative features regarding the operations of a
SC
Provide some basic SCM analytical tools
Gain insights into the IT implications
Textbooks and ReadingsTextbooks and Readings
Required textbook:
1. Chopra S. and Meindl, P.: Supply Chain Mgmt,
Strategy, Planning & Oper. (3rd edition)
Reference books
1. Designing and Managing the Supply Chain,
Simchi-Levi, D, Kaminsky, P & Simchi-Levi E.
Mcgraw-Hill, 2009.
2. Matching Supply with Demand: An Introduction to
Operations Management, 2nd Edition, by Gerard
Cachon and Christian Terwiesch. McGraw-Hill,
2009.
GradingGrading
There are three major parts to your final grade:
Individual:
There are 4 major parts to your final grade:
Case Preparation (I.e., case reading)
o The instructor will present 3 cases in class.
o These cases are typically long and contain complicated scenarios.
o 2 weeks before the case presentation, you are given a set of questions.
o You should hand in your answers to these questions prior to the class in which we will discuss the case.
o Any late submission will be discarded and marked zero. Those cases will be tested in the final examination.
Assignments (Two Sets) 18%
Case preparation 12%
Midterm (open book/notes) 20%
Final Examination (open book/notes 50%
Make-up
exams are not
offered.
GradingGrading
Assignments
o They consist of short case studies and homework. Assignments
will be graded. Only accept electronic submission is accepted
(via the course email), and the score to later submission will be
discounted according to the number of days of lateness.
Zero tolerance to plagiarism (both parties will be equally penalized).
Final Exam
Final is open-book
Textbooks, notes, everything except …
Combination of quantitative & qualitative questions
May include questions drawn from the cases
Course Logistics Course Logistics
TA:
Note handouts – also available online
My Tel No: 2609-8310, email: [email protected].
Office Hrs: TBD, Office: Engg-II, 507
Class website www.aect.cuhk.edu.hk/~ect7240
Login ID: ECT7240, password: cEt7240
Teaching Method
Lectures
Topics
Case analysis
Assignments
Game playing (by applying what you
have learnt)
Mathematics: Simple algebra, Basic
Probability & Stat.
Quantitative > Qualitative
Why Take This Course?Why Take This Course?
HK, a service economy, is becoming a log’s/distribution hub
Natural trans-shipment point
Excellent infrastructure / competitive log industry
Many companies have their origin in mfg Working in a logistics company, you are better
acknowledged of your customer’s SCM needs
HK becomes a service economy, HQs here remotely control all flows thru information flow
When you aspire to work in a distribution network, the course provides with cutting-edge concepts/techniques
For general/operations “people”, the course is most relevant
For a business IT analyst, the knowledge is an asset
Components take different modes from
different parts of the world; changed hands
several times before reaching the destination
Global Sourcing
wooden casing: sea, Sweden
Cheap peripheral:
van, HK LCD: truck, China
screw: train, China
microphone: air, Japan
microprocessor: air, Malaysia
destination: USA
Customer HiFi Co. Ltd. places an order to Silvery
Consumer Products (a US Dealer/Distributor)
The Story of Pressing a Button
sales, production planning, product
costing, production
World Freight Logistics
container terminal
container
vessel
warehouse
logistics/shipping of Silvery Consumer
• Mr. Simon Smith of the Customer HiFi Co. Ltd. had just completed the
order form for shipment on his computer.
• He double checked the amount and the cost: 1,000 sets of Hi-Fi for $650K. It was not a big deal. Yet the order probably would give him $70K to $85K net profit in six months.
• He pressed the return button of the keyboard. The electronic data was transferred motionlessly and silently. There was no warning.
• Mr. Smith turned off his computer, feeling sorry for the other end of the world; the ants in Hong Kong, or Shenzhen,would start to work crazily when they discovered his button-push a few hours later in their morning.
Mr. Smith was wrong. The ants had already been working
for some time on Smith’s order.
Right after Tommy, Sales Manager of Silvery Consumer
Products, caught the air about Smith’s order, he had
started pressing the Production Planning Department for
the earliest possible delivery date.
Johnny of the Planning Department had to check what
material was available and what was not. Luckily the
order only required standard components. It should be
easy for Johnny to buy, steal, or beg from vendors or other
orders.
It was estimated to complete this order within 2 weeks
Lou Pun took up the phone. “World Freight Logistics,”
he said hastily, while his eyes were still fixing on the
screen.
It was Horace of Silvery Consumer Products on the
other end of the line:
“1,000 sets of Hi-Fi’s. Around Six pallets. Oct. 15,
LA.”
“ When will they be ready?”
“Around the third week of September. There’s
plenty of time. By sea is good enough..”
Services of Freight ForwardersServices of Freight Forwarders
“How about Oct. 17 in LA? Short trip to LA. You mayget your goods ready by 26 or 27 of Sept. Standardcharge.”
“If you want to be in LA on or before Oct. 15, .. . OK,there is one. Woo! Long one; nearly round theworld. Goods must be ready by 20th. Absolutely nolater than that. “
“Another one: well, you won’t try that; first toSingapore; transit there; slightly more expensivethan the first one; store for two days in Singapore.Goods ready by 21st. Which one do you like?”
“How much is the first one? FOB-HK.
Others are the same as usual.”
– “OK. Pick and pack, customer clearance, and
documentation in Hong Kong. Do you need
custom clearance in LA?” “No.”
Now it was Lou Pun’s turn to calculate. His
fingers flied over the keys of the large Casio
calculator. In less than 10 seconds he told
Horace the exact number.
– Horace seemed happy with the number.
– “Thanks, Horace. We will be at your Buji factory
on 27 of Sept. ”
Free On Board. A trade term which
indicates that the supplier is responsible
to send to the port and load on ship, after
which point the buyer takes
responsibility.
Joseph of Warehouse (under Logistics Dept) had prepared for this moment. Horace had informed him days ago the expected completion time.
Yesterday Joseph had ordered his subordinates to check out the Hi-Fi’s from the warehouse by this time.
Soon, the truck arrived … to the Container Terminal … loaded up to an APL ship (for LA)
Factory Warehouse
Types of Players
customers:
shippers send and
consignees receive
Manufacturers/
Distributors/
Retailers
Divisions of
Logistics
Transportation
Operations
Planning
Warehousing
carriers:
provide means
of
transportation
Cargo
Consolidators
Warehouse
Operators
warehouse
operators:
provide all sort of
storage needs
Consolidators: build
up and breakdown
cargoes
Air-cargo,
Ocean,
Rail
Terminals
Air-cargo,
Ocean,
Rail
Terminals
terminal operators: provide
facilities to (temporarily)
store, sort, change carriers,
and change hands for
cargoes
freight forwarders: the
travel agents of
cargoes
Logistics Service Companies, e.g. Express, Trucking,
Third-party Logistics
Agents: Forwarders who take care of the headache for
shippers and consignees
Carriers e.g.
Airlines, Rail,
Ocean Liners
實際營運人
When & Where
In every transaction, there is a point in both time & geography,
Where/when does the title to the goods change?
Who’s responsibility for insurance and caring for the shipment (say, a horse) change?
Who’s responsibility for paying & arranging transportation charge?
Jan. 18,
2007.
A Panama-flagged oil tanker split in two before
it sank near the Red Sea entrance to the Suez
Canal on Friday. August 30th, 2009
International payment is the most difficult link of international trade chain – pay or delivery cargo – who first
The process of exporting is incomplete without receipt of payment. Export income is considered earned only when payment has been received
Thousand miles between the Seller and the Buyer
Seller: sending out, but afraid of not getting paid (timely and rightly)
Buyer: paying, but afraid of not getting the right good (quant/quality/time,…)
Banks, insurances, legal services, …
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