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Logistics & SCM - Coggle Diagram
Logistics & SCM
Six important developments over the past decades
3.Improvement in productivity
Containerisation transformed freight transport by enabling easier multimodal movement, lowering costs, improving efficiency, and reducing manual port labour.
Advancements in propulsion technologies allowed for faster speed in freight transport.
Barcoding and online tracking and tracing of freight used by DHL, FedEx and UPS increased effeciency
Adoption of radio frequency identification (RFID) will also increase efficiency.
1.Reduced Transport Intensity of Freight
From bulky raw materials (lower value) to value added finished products
(higher value)
Eg. went from shipping live chickens to processed, ready to cook chickens
Higher value freight able to absorb more transport costs than lower value freigh
2.Deregulation of Transport
Eg. FedEx greatly benefited from the deregulation of the US air freight market, now having one of the world's largest fleet of freighter aircraft
Transport has five main modes—air, road, water, rail, and pipeline.
Many countries have deregulated transport markets in recent decades. Deregulation, in theory, generally makes freight movement cheaper and more efficient.
4.Inventory reduction
After World War 2, companies realised a more focused and integrated management of inventory would help in significant cost savings.
Growing competition and customer demands pushed firms to improve inventory management. By adopting practices like just-in-time (JIT) delivery and reducing excess stock, companies cut costs.
5.Change in
company structure
Companies have shifted from vertical integration to outsourcing, relying more on suppliers.
To improve performance, firms are moving away from silo-based thinking and integrating functions across the business.
Competition based on time (order to delivery time) has become a key success factor
Falling product prices
increased competition and falling marketplace prices forcing companies to find avenues to cut costs
Objectives
The evolution of logistics and SCM
SCM
Before 1900
very small scale with simple movement :train:
in 1950s
Industrial Revolution (focus on mass production & efficiency :factory:
in 1980s
Birth of modern SCM (JIT & Lean)
:globe_with_meridians: :iphone: :robot_face:
Rise of E-commerce
Demand Forecasting
1990s - 2020s
Highly connected Global SC
Automation & AI :
Logistics
Originated from the Military to describe the organisation of troops, supplies, and transport
Entered into the business world, focusing on mainly transportation, warehousing, and inventory control
Advancements
Barcoding and IT Systems
Containerization
RFID
Multi Dimensional to build edge:
Speed; Flexibility; Transparency
Late 20th Century
No live tracking updates
Breakbulk shipping
Manual counting
Linear Focus
Point A ------------ Point B
The distinction between logistics and SCM
Logistics
Definition: Planning, implementing, controlling transport & storage of goods, services, info (origin → consumption)
Focus: Inside company (or single-firm operations)
Key elements: “8 Rights” → Right product, way, quantity, quality, place, time, customer, cost
Tactical/operational scope
SCM
Definition: Managing network of upstream & downstream organisations, relationships & flows
Focus: Multi-company (network-wide integration)
Key flows: Materials, Information, Resources (finance, people, equipment, relationships)
Strategic, boundary-spanning scope
Relationship
Four views: Traditionalist, Relabelling, Unionist, Intersectionist
Book’s position: Unionist — Logistics = part of SCM (SCM is broader)